Difference between Consumer and Organisational Buying Behaviour:

There are no.of reasons that can be identified to differentiate the process of buying for an individual
consumer and Industrial consumer.
Organisations buy products in to services to reach their organisational goals. These goals should be
profit maximisation, cost reducing, meeting employee needs and satisfy legal obligations. Therefore
organisations are more rational during the purchase; however individuals by goods & services for their
own satisfaction & other factors could influence the buying behaviour to very small extent. Hence,
consumer buying process could be more spontaneous.
More people are involved any organisation buying. There may be wide range of influences in the
decision making process which could be from the various levels in the organisation. In consumer buying
behaviour also they exists many roles played by different individuals. However, the extent or degree of
people participation is very less in individual buying process.
Organisation purchases are more likely to be based on formal routing like purchasing policies,
constraints & requirements established by the organisations. This is not applicable to individual
purchases and hence is more informal.
The poor performance of a product might cause annoyance to a customer & may not result in the
repurchase of the same product. But in case of business buyer it could need to financial loss non
achievement of goals.
In the process of reducing risk of the organisational buyer, the manufacturers face a greater attention to
the development of product for organisational buyer, because he would seek for a longer relationship
between buyer and seller with the organisation. However he may not resort to such measures for
individual buyer.
Since the organisational is more formal, therefore the complexity of the process also increases. It could
be a time consumer product & lot of people & various level & departments could be involved in the
organisational purchase. However this is not the case in individual purchase.
Segmentation, Targeting, and Positioning
Segmentation, targeting, and positioning together comprise a three stage process. We first (1)
determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and,
finally, (3) implement our segmentation by optimizing our products/services for that
segment andcommunicating that we have made the choice to distinguish ourselves that way.

Segmentation involves finding out what kinds of consumers with different needs exist. In the auto
market, for example, some consumers demand speed and performance, while others are much more
concerned about roominess and safety. In general, it holds true that You cant be all things to all
people, and experience has demonstrated that firms that specialize in meeting the needs of one group
of consumers over another tend to be more profitable.
Generically, there are three approaches to marketing. In the undifferentiatedstrategy, all consumers are
treated as the same, with firms not making any specific efforts to satisfy particular groups. This may
work when the product is a standard one where one competitor really cant offer much that another
one cant. Usually, this is the case only for commodities. In the concentratedstrategy, one firm chooses
to focus on one of several segments that exist while leaving other segments to competitors. For
example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned
seating for low prices. In contrast, most airlines follow the differentiatedstrategy: They offer high priced
tickets to those who are inflexible in that they cannot tell in advance when they need to fly and find it
impractical to stay over a Saturday. These travelersusually business travelerspay high fares but can
only fill the planes up partially. The same airlines then sell some of the remaining seats to more price
sensitive customers who can buy two weeks in advance and stay over.
Note that segmentation calls for some tough choices. There may be a large number of variables that
can be used to differentiate consumers of a given product category; yet, in practice, it becomes
impossibly cumbersome to work with more than a few at a time. Thus, we need to determine which
variables will be most useful in distinguishing different groups of consumers. We might thus decide, for
example, that the variables that are most relevant in separating different kinds of soft drink consumers
are (1) preference for taste vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price
sensitivitywillingness to pay for brand names; and (4) heavy vs. light consumers. We now put these
variables together to arrive at various combinations.
Several different kinds of variables can be used for segmentation.

Demographic variables essentially refer to personal statistics such as income, gender, education,
location (rural vs. urban, East vs. West), ethnicity, and family size. Campbells soup, for instance, has
found that Western U.S. consumers on the average prefer spicier soupsthus, you get a different
product in the same cans at the East and West coasts. Facing flat sales of guns in the traditional male
dominated market, a manufacturer came out with the Lady Remmington, a more compact, handier gun
more attractive to women. Taking this a step farther, it is also possible to segment on lifestyle and
values.
Some consumers want to be seen as similar to others, while a different segment wants to stand apart
from the crowd.
Another basis for segmentation is behavior. Some consumers are brand loyali.e., they tend to stick
with their preferred brands even when a competing one is on sale. Some consumers are heavy users
while others are light users. For example, research conducted by the wine industry shows that some
80% of the product is consumed by 20% of the consumerspresumably a rather intoxicated group.
One can also segment on benefits sought, essentially bypassing demographic explanatory variables.
Some consumers, for example, like scented soap (a segment likely to be attracted to brands such as Irish
Spring), while others prefer the clean feeling of unscented soap (the Ivory segment). Some
consumers use toothpaste primarily to promote oral health, while another segment is more interested
in breath freshening.
In the next step, we decide to target one or more segments. Our choice should generally depend on
several factors. First, how well are existing segments served by other manufacturers? It will be more
difficult to appeal to a segment that is already well served than to one whose needs are not currently
being served well. Secondly, how large is the segment, and how can we expect it to grow? (Note that a
downside to a large, rapidly growing segment is that it tends to attract competition). Thirdly, do we
have strengths as a company that will help us appeal particularly to one group of consumers? Firms may
already have an established reputation. While McDonalds has a great reputation for fast, consistent
quality, family friendly food, it would be difficult to convince consumers that McDonalds now offers
gourmet food. Thus, McDs would probably be better off targeting families in search of consistent
quality food in nice, clean restaurants.
Positioning involves implementing our targeting. For example, Apple Computer has chosen to position
itself as a maker of user-friendly computers. Thus, Apple has done a lot through its advertising to
promote itself, through its unintimidating icons, as a computer for non-geeks. The Visual C software
programming language, in contrast, is aimed a techies.

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that
most successful firms fall into one of three categories:
Operationally excellent firms, which maintain a strong competitive advantage by maintaining
exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a
significantly lower cost than those of less well organized and well run competitors. The emphasis here is
mostly on low cost, subject to reliable performance, and less value is put on customizing the offering for
the specific customer. Wal-Mart is an example of this discipline. Elaborate logistical designs allow
goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of
supplies will be needed.
Customer intimate firms, which excel in serving the specific needs of the individual customer well. There
is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the
customer. Reliability is also stressed. Nordstroms and IBM are examples of this discipline.
Technologically excellent firms, which produce the most advanced products currently available with the
latest technology, constantly maintaining leadership in innovation. These firms, because they work with
costly technology that need constant refinement, cannot be as efficient as the operationally excellent
firms and often cannot adapt their products as well to the needs of the individual customer. Intel is an
example of this discipline.
Treacy and Wiersema suggest that in addition to excelling on one of the three value dimensions, firms
must meet acceptable levels on the other two. Wal-Mart, for example, does maintain some level of
customer service. Nordstroms and Intel both must meet some standards of cost effectiveness. The
emphasis, beyond meeting the minimum required level in the two other dimensions, is on the
dimension of strength.
Repositioning involves an attempt to change consumer perceptions of a brand, usually because the
existing position that the brand holds has become less attractive. Sears, for example, attempted to
reposition itself from a place that offered great sales but unattractive prices the rest of the time to a

store that consistently offered everyday low prices. Repositioning in practice is very difficult to
accomplish. A great deal of money is often needed for advertising and other promotional efforts, and in
many cases, the repositioning fails.
To effectively attempt repositioning, it is important to understand how ones brand and those of
competitors are perceived. One approach to identifying consumer product perceptions
is multidimensional scaling. Here, we identify how products are perceived on two or more
dimensions, allowing us to plot brands against each other. It may then be possible to attempt to
move ones brand in a more desirable direction by selectively promoting certain points. There are two
main approaches to multi-dimensional scaling. In the a prioriapproach, market researchers identify
dimensions of interest and then ask consumers about their perceptions on each dimension for each
brand. This is useful when (1) the market researcher knows which dimensions are of interest and (2) the
customers perception on each dimension is relatively clear (as opposed to being made up on the spot
to be able to give the researcher a desired answer). In the similarity rating approach, respondents are
not asked about their perceptions of brands on any specific dimensions. Instead, subjects are asked to
rate the extent of similarity of different pairs of products (e.g., How similar, on a scale of 1-7, is Snickers
to Kitkat, and how similar is Toblerone to Three Musketeers?) Using a computer algorithms, the
computer then identifies positions of each brand on a map of a given number of dimensions. The
computer does not reveal what each dimension meansthat must be left to human interpretation
based on what the variations in each dimension appears to reveal. This second method is more useful
when no specific product dimensions have been identified as being of particular interest or when it is
not clear what the variables of difference are for the product category.

https://quizlet.com/11261593/marketing-part-2-segmentation-targetingpositioningconsumer-behaviour-flash-cards/

Cultural Factors
affecting Consumer
Behaviour
Consumer behaviour deals with the study of buying behaviour of
consumers. Consumer behaviour helps us understand why and
why not an individual purchases goods and services from the
market.

There are several factors which influence the buying decision of

consumers, cultural factors being one of the most important
factors.

What are Cultural Factors ?

Cultural factors comprise of set of values and ideologies of a
particular community or group of individuals. It is the culture
of an individual which decides the way he/she behaves. In simpler
words, culture is nothing but values of an individual. What an
individual learns from his parents and relatives as a child
becomes his culture.
Example - In India, people still value joint family system and
family ties. Children in India are conditioned to stay with their
parents till they get married as compared to foreign countries
where children are more independent and leave their parents
once they start earning a living for themselves.
Cultural factors have a significant effect on an individuals buying
decision. Every individual has different sets of habits, beliefs and
principles which he/she develops from his family status and
background. What they see from their childhood becomes their
culture.
Let us understand the influence of cultural factors on buying
decision of individuals with the help of various examples.
Females staying in West Bengal or Assam would prefer buying
sarees as compared to Westerns. Similarly a male consumer
would prefer a Dhoti Kurta during auspicious ceremonies in
Eastern India as this is what their culture is. Girls in South India

wear skirts and blouses as compared to girls in north India who

are more into Salwar Kameez.
Our culture says that we need to wear traditional attire on
marriages and this is what we have been following since years.
People in North India prefer breads over rice which is a favorite
with people in South India and East India.

Subcultures
Each culture further comprises of various subcultures such as
religion, age, geographical location, gender (male/female), status
etc.

Religion (Christianity, Hindu, Muslim,

Sikhism, Jainism etc)
A Hindu bride wears red, maroon or a bright colour lehanga or
saree whereas a Christian bride wears a white gown on her
wedding day. It is against Hindu culture to wear white on
auspicious occasions. Muslims on the other hand prefer to wear
green on important occasions.
For Hindus eating beef is considered to be a sin whereas Muslims
and Christians absolutely relish the same. Eating pork is against
Muslim religion while Hindus do not mind eating it.
A sixty year old individual would not like something which is too
bright and colorful. He would prefer something which is more

sophisticated and simple. On the other hand a teenager would

prefer funky dresses and loud colours.
In India widows are expected to wear whites. Widows wearing
bright colours are treated with suspicion.

Status (Upper Class, Middle class and

Lower Class)
People from upper class generally have a tendency to spend on
luxurious items such as expensive gadgets, cars, dresses etc.You
would hardly find an individual from a lower class spending
money on high-end products. A person who finds it difficult to
make ends meet would rather prefer spending on items
necessary for survival. Individuals from middle class segment
generally are more interested in buying products which would
make their future secure.

Gender (Male/Female)
People generally make fun of males buying fairness creams as in
our culture only females are expected to buy and use beauty
products. Males are perceived to be strong and tough who look
good just the way they are.

Cross Cultural understanding of consumer behavior

by SREE

RAMA RAO

on JANUARY 1, 2010

Assessing cultural change still remains a difficult task and marketers are likely to continue to face
problems when attempting to understand, appreciate, and reflect changing cultural values. First, these

changes are choice elusive and hard to define, and their practical effects are frequently indirect. Second,
the marketer may tend to ascribe fundamental cultural changes simply to the generation gap and
incorrectly assume that they are only fads and will quickly disappear. Finally, because change often
generates complexity, marketers may resist changing cultural values rather than trying to take
advantage of them.
More and more companies have adopted a global outlook in which the world becomes their market. For
example, numerous major corporations, such as Coca Cola, Hoover, IBM, Pfizer and Gillette, receive over
half of their earnings from foreign operations while many others also have significant international
markets. Such situations require the marketers appreciation both of culture differences among
international markets and of their influence on consumer behavior. In this section some of the
marketing implication of these cultural subtleties will be discussed. Unfortunately, there have been
rather few published cross cultural studies of consumer behavior that the marketer may use in making
strategy decisions. There have been some important recent examples of research in this area, however.
The need for cross cultural understanding:
A recent study of almost 12,000 managers around the world found that although changes were
occurring in every country, culture, and corporation, there is still no common culture of management.
Moreover, managers views tend to correspond more to their countrys cultural heritage and less to its
geographic location.
The diversity among cultures is reflected not only in management but also in marketing and consumer
behavior and it can take some getting used to. Thus, when Americans venture broad, they experience
what anthropologists call culture shock, that is, a series of psychological jolts when they encounter new
customs, value systems, attitudes and work habits; the shock reduces their effectiveness in foreign
commercial environments. Therefore, it is crucial to effective operations that the manager be well
schooled in the host culture. A lack of understanding of the host culture will lead the manager to think
and act as if he would in his home culture. Such a self reference criterion that is, the unconscious
reference to ones own cultural values has been termed the root cause of most international business
problems abroad. The goal should be to eliminate this cultural myopia. The following effectively
expresses the payoff from understanding how culture may influence cross cultural executives.
A general comparative analysis if cultures may help marketing executives to anticipate the responses of
their rivals, understand more accurately their customs in business transactions and deal with colleagues
of different nationalities in joint decision. Culture makes a difference in problem identification and in the
objectives motivating choice. Culture also may make a difference in the communication of problems and
recommendations, and particularly in the decisiveness of recommendations. Failure to understand these
differences may lead to noisy communication, misinformation and misunderstanding. Culture also
makes a difference in individual strategies to adjust decision situations to facilitate choice and mitigate
undesirable consequences for the organization and the decision maker.
The marketer needs a frame of reference with which to understand and evaluate the range of cultural
values that may be encountered. A useful conceptualization of the possible range of variations in values

found in different cultures is offered which presents a classification of value orientations that might be
encountered by the international marketer. This model suggests five basic orientations, which are
thought to be common to all human groups. These relate to human nature, relationship of people to
nature, sense of time, activity and social relations. The marketers task then becomes one of seeking to
understand what type of value system predominates in a given culture and reacting effectively to that
system through marketing. Thus, the international marketer would benefit from doing the same.
Americans would fall on the right hand side of this value range. Nevertheless it has been observed that
even in our modern value systems there are some primitive aspects of consumption that serve as an
outlet for spiritual expression and the preservation of ethnic heritage.
Families and Family Decision Making
The Family Life Cycle. Individuals and families tend to go through a "life cycle:" The simple life cycle goes
from

For purposes of this discussion, a "couple" may either be married or merely involve living together. The
breakup of a non-marital relationship involving cohabitation is similarly considered equivalent to a
divorce.
In real life, this situation is, of course, a bit more complicated. For example, many couples undergo
divorce. Then we have one of the scenarios:

Single parenthood can result either from divorce or from the death of one parent. Divorce usually
entails a significant change in the relative wealth of spouses. In some cases, the non-custodial parent

(usually the father) will not pay the required child support, and even if he or she does, that still may not
leave the custodial parent and children as well off as they were during the marriage. On the other hand,
in some cases, some non-custodial parents will be called on to pay a large part of their income in child
support. This is particularly a problem when the non-custodial parent remarries and has additional
children in the second (or subsequent marriages). In any event, divorce often results in a large demand
for:
Low cost furniture and household items
Time-saving goods and services
Divorced parents frequently remarry, or become involved in other non-marital relationships; thus, we
may see

Another variation involves

Here, the single parent who assumes responsibility for one or more children may not form a relationship
with the other parent of the child.
Integrating all the possibilities discussed, we get the following depiction of the Family Life Cycle:

Generally, there are two main themes in the Family Life Cycle, subject to significant exceptions:
As a person gets older, he or she tends to advance in his or her career and tends to get greater income
(exceptions: maternity leave, divorce, retirement).
Unfortunately, obligations also tend to increase with time (at least until ones mortgage has been paid
off). Children and paying for ones house are two of the greatest expenses.
Note that although a single person may have a lower income than a married couple, the single may be
able to buy more discretionary items.
Family Decision Making. Individual members of families often serve different roles in decisions that
ultimately draw on shared family resources. Some individuals are information gatherers/holders, who
seek out information about products of relevance. These individuals often have a great deal of power
because they may selectively pass on information that favors their chosen alternatives. Influencers do
not ultimately have the power decide between alternatives, but they may make their wishes known by
asking for specific products or causing embarrassing situations if their demands are not met. Thedecision
maker(s) have the power to determine issues such as:
Whether to buy;
Which product to buy (pick-up or passenger car?);
Which brand to buy;
Where to buy it; and
When to buy.
Note, however, that the role of the decision maker is separate from that of thepurchaser. From the
point of view of the marketer, this introduces some problems since the purchaser can be targeted by
point-of-purchase (POP) marketing efforts that cannot be aimed at the decision maker. Also note that
the distinction between the purchaser and decision maker may be somewhat blurred:
The decision maker may specify what kind of product to buy, but not which brand;
The purchaser may have to make a substitution if the desired brand is not in stock;
The purchaser may disregard instructions (by error or deliberately).
It should be noted that family decisions are often subject to a great deal of conflict. The reality is that
few families are wealthy enough to avoid a strong tension between demands on the familys resources.
Conflicting pressures are especially likely in families with children and/or when only one spouse works
outside the home. Note that many decisions inherently come down to values, and that there is
frequently no "objective" way to arbitrate differences. One spouse may believe that it is important to
save for the childrens future; the other may value spending now (on private schools and computer
equipment) to help prepare the children for the future. Who is right? There is no clear answer here. The

situation becomes even more complex when more partiessuch as children or other relativesare
involved.
Some family members may resort to various strategies to get their way. One isbargainingone member
will give up something in return for someone else. For example, the wife says that her husband can take
an expensive course in gourmet cooking if she can buy a new pickup truck. Alternatively, a child may
promise to walk it every day if he or she can have a hippopotamus. Another strategy is reasoning
trying to get the other person(s) to accept ones view through logical argumentation. Note that even
when this is done with a sincere intent, its potential is limited by legitimate differences in values
illustrated above. Also note that individuals may simply try to "wear down" the other party by endless
talking in the guise of reasoning (this is a case of negative reinforcement as we will see subsequently).
Various manipulative strategies may also be used. One is impression management, where one tries to
make ones side look good (e.g., argue that a new TV will help the children see educational TV when it is
really mostly wanted to see sports programming, or argue that all "decent families make a contribution
to the church"). Authorityinvolves asserting ones "right" to make a decision (as the "man of the house,"
the mother of the children, or the one who makes the most money). Emotioninvolves making an
emotional display to get ones way (e.g., a man cries if his wife will not let him buy a new rap album).
Group Influences
Humans are inherently social animals, and individuals greatly influence each other.
A useful framework of analysis of group influence on the individual is the so called reference groupthe
term comes about because an individual uses a relevant group as a standard of reference against which
oneself is compared. Reference groups come in several different forms.
The aspirational reference group refers to those others against whom one would like to compare
oneself. For example, many firms use athletes as spokespeople, and these represent what many people
would ideally like to be.
Associative reference groups include people who more realistically represent the individuals current
equals or near-equalse.g., coworkers, neighbors, or members of churches, clubs, and
organizations. Paco Underhill, a former anthropologist turned retail consultant and author of the
book Why We Buy has performed research suggesting that among many teenagers, the process of
clothes buying is a two stage process. In the first stage, the teenagers go on a "reconnaissance" mission
with their friends to find out what is available and what is "cool." This is often a lengthy process. In the
later phase, parentswho will need to pay for the purchasesare brought. This stage is typically much
briefer.
Finally, the dissociative reference group includes people that the individual would not like to be like. For
example, the store literally named The Gap came about because many younger people wanted to
actively dissociate from parents and other older and "uncool" people. The Quality Paperback Book Club
specifically suggests in its advertising that its members are "a breed apart" from conventional readers of
popular books.

Reference groups come with various degrees of influence. Primary reference groups come with a great
deal of influencee.g., members of a fraternity/sorority. Secondary reference groups tend to have
somewhat less influencee.g., members of a boating club that one encounters only during week-ends
are likely to have their influence limited to consumption during that time period.
Another typology divides reference groups into the informational kind (influence is based almost
entirely on members knowledge), normative(members influence what is perceived to be "right,"
"proper," "responsible," or "cool"), or identification. The difference between the latter two categories
involves the individuals motivation for compliance. In case of the normative reference group, the
individual tends to comply largely for utilitarian reasonsdressing according to company standards is
likely to help your career, but there is no real motivation to dress that way outside the job. In contrast,
people comply with identification groups standards for the sake of belongingfor example, a member
of a religious group may wear a symbol even outside the house of worship because the religion is a part
of the persons identity.

Reference groups are groups that consumers compare

themselves to or associate with. Reference groups are similar
to opinion leaders in that they can have a profound influence
on consumer behavior. Reference groups are considered a social
influence in consumer purchasing. They are often groups that
consumers will look to to make purchasing decisions. So if a
reference group endorses a product, either through use or
statements about the product, those that look to the group will
often purchase that product. On the other hand, if a reference
group disapproves of a product, those that associate with that
group will probably not purchase the product.
Types of Reference Groups
Reference groups can be either formal or informal. Schools,
friends, and peers are examples of informal reference groups .
Clubs, associations, and religious organizations are usually formal
reference groups. Individuals can also be reference groups
(usually known as opinion leaders). Additionally, celebrities can
be used as a reference group. A company might use a celebrity it
feels will match its target market to get that market to purchase its
product. For example, a few years ago Shaquille O'Neal was
used to endorse Pepsi because Pepsi felt he represented the
spirit of teenagers of the time.

Influence of Reference Groups

Reference groups can and do have a tremendous influence on purchasing decisions. This is evident in a
number of ways, such as through roles. Everyone is expected to behave in a certain way based on the
reference group we belong to. Students act like students. In keeping with this idea, people will often
modify their own behavior to coincide with group norms (even those that profess non-conformity are in
some ways conforming with other people who want the same thing). Reference groups communicate
through opinion leaders, who influence what others do, act, and buy. In the consumer world, this means
that if a reference group purchases a product, those that associate with the group likely will as well.
Opinion leaders:
Our purchase decisions are influenced by any number of people or groups. We often look to
opinion leaders for help in our consumer decisions. Opinion leaders are usually people who are more
knowledgeable about a certain product or service than the average consumer. As such, opinion leaders
can shape how a product is viewed. Consumers are constantly seeking out the advice of knowledgeable
friends or acquaintances who can provide information, give advice, or actually make the decision. For
some product categories, there are professional opinion leaders who are quite easy to identifyfor
instance, auto mechanics , beauticians, stock brokers, and physicians. All these professionals can
influence the decisions consumers make within their area of expertise. Sometimes, these opinion
leaders can actually be groups, known as reference groups.

Mechanics as Secondary Groups

Mechanics can be considered opinion leaders in the automotive industry.

Characteristics of Opinion Leaders

Opinion leaders are generally people who have the ability to influence others. They usually have deeper
expertise in a certain area, and are often looked to for help in making consumer decisions. For example,
a local high school teacher may be an opinion leader for parents in selecting colleges for their children.
Often, an opinion leader is among the first to use a new product or service, and can then pass on his
or her opinions of the product to others. Opinion leaders are often trusted and unbiased and have
the social network of friends, family, and coworkers necessary to disperse information.

Opinion Leaders in Marketing

Opinion leaders are particularly useful in marketing. If a marketer can identify key opinion leaders for a
certain group, she can then direct her efforts towards attracting these individuals. In marketing,
celebrities are often used as opinion leaders. Although they may not actually know more about a
product or service, there is usually the perception that they do. Celebrity endorsements in marketing
are a way to give clout to a product or service . Opinion leaders can have a profound influence on the
success of a product, and on one's own consumer purchases.
Diffusion of Innovation
Products tend to go through a life cycle. Initially, a product is introduced. Since the product is not well
known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually
limited. Eventually, however, many products reach a growth phasesales increase dramatically. More
firms enter with their models of the product. Frequently, unfortunately, the product will reach
a maturity stage where little growth will be seen. For example, in the United States, almost every
household has at least one color TV set. Some products may also reach a decline stage, usually because
the product category is being replaced by something better. For example, typewriters experienced
declining sales as more consumers switched to computers or other word processing equipment. The
product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out,
it is likely to first be adopted by consumers who are more innovative than othersthey are willing to
pay a premium price for the new product and take a risk on unproven technology. It is important to be
on the good side of innovators since many other later adopters will tend to rely for advice on the
innovators who are thought to be more knowledgeable about new products for advice.

At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a
saturated market for baking soda in its traditional use, Arm Hammer launched a major campaign to
get consumers to use the product to deodorize refrigerators. Deodorizing powders to be used before
vacuuming were also created.
It is sometimes useful to think of products as being either new or existing.

Many firms today rely increasingly on new products for a large part of their sales. New products can be
new in several ways. They can be new to the marketnoone else ever made a product like this before.
For example, Chrysler invented the minivan. Products can also be new to the firmanother firm
invented the product, but the firm is now making its own version. For example, IBM did not invent the
personal computer, but entered after other firms showed the market to have a high potential. Products
can be new to the segmente.g., cellular phones and pagers were first aimed at physicians and other
price-insensitive segments. Later, firms decided to target the more price-sensitive mass market. A
product can be new for legal purposes. Because consumers tend to be attracted to new and improved
products, the Federal Trade Commission (FTC) only allows firms to put that label on reformulated
products for six months after a significant change has been made.
The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among
people. Usually, when new products or ideas come about, they are only adopted by a small group of
people initially; later, many innovations spread to other people.
Innovator

Innovators are the first to purchase a product and make up 2.5% of all purchases of
the product. Innovators purchase the product at the beginning of the life cycle. They
are not afraid of trying new products that suit their lifestyle and will also pay a
premium for that benefit. Sales to innovators are not usually an indication of future
sales as innovators simply buy because the product is new.
Early Adopters

The next group of purchasers are called Early Adopters and they make up 13.5% of
purchases. This group of purchasers adopt early but unlike innovators adoption is after
careful thought. Early Adopters are usually opinion leaders in their circle (of friends,
family and colleagues) so adoption by this group is crucial for the success of the
product. Early adopters help the product's journey in becoming "socially acceptable".
Early Majority

The Early Majority are a cautious group of purchasers, making up 34% of purchases.
They will not buy a product until it has become "socially acceptable". Early majority
purchases are needed for the product to achieve wide spread acceptance.
Late Majority

Late Majority make up another 34% of sales and usually purchase the product during
the late stages of the product's life cycle. They are more cautious than the early
majority and will only buy after the majority of people have purchased the product.

Laggards

The final group of people to purchase a product are called Laggards. Laggards make
up 16% of total sales and purchase the product near the end of its life. Some laggards
will never purchase a product, whilst others will buy it because their existing product
is broken and it can not be repaired or replaced with an identical product. Laggards
may wait to see if the product will get cheaper and by the time they purchase the
product a new version of the product is often (already) on the market.
Conclusion

All groups (whether that is at work or within social circles) usually have opinion
leaders that the rest of the group like to follow. Opinion leaders are people who are
good at selecting the next big thing such as the latest fashion trend or electronic
gadget. The challenge for firms is to persuade opinion leaders to adopt their product.
Identifying opinion leaders can be challenging, as product type will dictate the
product adoption behaviour of a person. For example a person may be an innovator
for electronic products but a laggard for kitchenware products.

Five stages of the adoption process

Stage

Definition

The individual is first exposed to an innovation, but lacks information

Knowledge

about the innovation. During this stage the individual has not yet been
inspired to find out more information about the innovation.

Persuasion

The individual is interested in the innovation and actively seeks related

information/details.

The individual takes the concept of the change and weighs the
advantages/disadvantages of using the innovation and decides whether
Decision

to adopt or reject the innovation. Due to the individualistic nature of this

stage, Rogers notes that it is the most difficult stage on which to acquire
empirical evidence.[11]

The individual employs the innovation to a varying degree depending on

Implementati the situation. During this stage the individual also determines the
on

usefulness of the innovation and may search for further information

about it.

The individual finalizes his/her decision to continue using the innovation.

Confirmation This stage is both intrapersonal (may cause cognitive dissonance) and
interpersonal, confirmation the group has made the right decision.

Motivation:

Motivation is the why of behaviour. It is an intervening variable between stimulus and response and a
governing force of consumer behaviour.
Motivation refers to the drives, urges, wishes or desires which initiate the sequence of events known as
behaviour. as defined by Professor M.C. Burk. Motivation is an active, strong driving force that exists to
reduce a state of tension and to protect, satisfy and enhance the individual and his self-concept. It is one
that leads the individual to act in a particular way. It is the complex net-work of psychological and
physiological mechanisms.
Therefore, motives can be conscious or unconscious, rational or emotional, positive or negative. These
motives range from a mere biological desires like hunger and thirst to the most advanced scientific
pursuits like landing on the Moon or Mars.
It was Abraham Maslow who developed five steps human need hierarchy those of survival-Safety
Belongingness and Love-Easteem and Self Actualisation.
According to him, fulfillment of one will lead to the fulfillment of higher motives. The implications are
that as we move up in the ladder, the input of marketing becomes more and more deep and subtle.
2. Perception:
Marketing management is concerned with the understanding of the process of perception because,
perception leads to thought and thought leads to action. Perception is the process whereby stimuli are
received and interpreted by the individual and translated into a response.

In other words, perception is the process by which the mind receives, organises and interprets physical
stimuli. To perceive is to see, hear, touch, taste, smell and sense internally something or some event or
some relation.
Perception is selective because, and individual cannot possibly perceive all stimulus objects within his
perceptional field; hence, he perceives selectively. Perception is organized because, perceptions have
meaning for the individual and they do not represent a buzzing confusion. Perception depends upon
stimulus factors. That is, the nature of physical stimulus itself is a determinant of perception.
The variables like colour size, contrast, intensity, frequency and movement are of this kind. Again,
perception depends on the personal factors. What the individual brings to the situation governs
perception his ability to see or hear the message, his needs, his moods, memory, expressions and values
all these modify the message reception.
The personal factor of perception is his self concept, need, span of apprehension, mental set and the
past experiences.
Perception has its own impact on consumer behaviour or consumer decision-making. Let us take some
such cases:
Perception and communication:
It is estimated that 90 per cent of the stimuli that the individuals perceive come through sight and rest
from hearing. That is why, advertisements bank heavily audio on visual stimuli.
However, it does not mean that loud noises, bright colours and large ads themselves guarantee
consumer attention and response. Contrary to this, it is the use of haunting melodies, pastel shades,
regional accents and careful adjustment of ad size in relation to the total page or poster size all affect
perception and these factors may give better results.
Product and brand perception:
Good many studies have been made of the ways in which the consumers perceive the products and the
brands they choose regularly. It is brand images and the brand differentiation that play vital role in
perception in addition to the physical characteristics of the product. Therefore, it is a must for a
marketer to examine all the factors that impinge on the construction of a brand image to ascertain their
effects on consumer perception of the companys marketing mix.
Price perception:
Price is another element of marketing mix where perception has its implications. Studies have proved
beyond doubt that consumers judge product or service quality by price. Higher the price better the
quality that goes.

This goes on establishing that there is going to the direct or positive relationship between price and
demand where marketer is cared to gain. Another aspect of this price perception is psychological
pricing.
The reasoning behind such pricing strategies is that consumers are likely to perceive used in cut-price
sales promotions to increase the feeling that a price has been drastically reduced.
Store perception:
There are five major components of stores image namely, location design-product assortment-services
and personnel each of which contributes to consumer perception of the place from which he or she
buys.
Mere physical attributes do to talk of a store image. Other intangible factors, too, influence consumer
perception of stores image such as advertising, inter-personal communication and experience.
Consumer perceptions of stores are greatly influenced by consumers own self- perception and motives.
Further, consumers self-images influence the places in which they shop.
Perceived risk:
The concept of perceived-risk recognizes that consumer experiences a sense of risk in purchase and that
consumer behaviour can be studied profitably as a risk reducing behaviour.
Consumer behaviour involves risk in the sense that any action of a consumer will produce results which
he cannot predict with certainty. The perception of risk in a purchase situation is a function of the
possible consequences and the product uncertainty involved. Perceived risk can be divided into forms
namely, functional and psychological.
Functional risk is related with the performance and the psychosocial risk is related with the fact whether
the product enhances ones sense of well being or self-concept.
The level of perceived risk is a function of the uncertainty involved and the possible consequences of
purchase and can be reduced by gaining greater certainty or by minimising consequences. In most cases,
it is increasing the element of certainty.
3. Learning:
In behavioural science, learning means any change in behaviour which comes about as a result of
experience. Learning is the process of acquiring knowledge. Consumer behaviour is a process of learning
because; it is modified according to the customers past experience and the objectives he or she has set.
This process of learning is made up of four stages namely, Drive- cue-response and Reinforcement.
Drive refers to an internal state of tension which warrants action.

Thus, hunger or thirst can be a drive. A cue is an environmental stimulus. For instance, it can be an ad
on food item or soft- drink, Response represents the persons reaction to cues within his environment.
Here, it can be purchased of food item or soft-drink. Reinforcement is the responses reward.
The food item or soft-drink. Reinforcement is the response reward. The food item or soft drink satisfies
the hunger or the thirst. When reinforcement happens, the response may be duplicated resulting in
habit formation or absence of reinforcement results in extinction of learnt habit.
As most consumer behaviour is learnt behaviour, it has deep impact on consumer buying process. Prior
experience and learning acts as buying guide. In-spite of such habitual behaviour, one can think of
reasonable amount of brand switching, trying new products, does take place.
The strong tendency of most consumers to develop brand loyalties definitely benefits the makers of
established brands. This makes the manufacturer of a new brand to face difficulty in breaking such
loyalties and encouraging brand switching.
He succeeds in his efforts when he shows that his product is potentially much more satisfying than his
competitors. Free sampling, in store trial and demonstrations and deal activities may be used to break
the existing brand barrier to establish new patterns of purchase behaviour.
To the extent the learning and brand loyalty can be gained for a product, the manufacturer activates a
more stable sales profile less vulnerable to the competitive inroads.
4. Attitude:
The concept of attitude occupies a central position in the consumer behaviour studies in particular and
social psychology in general because; attitude measurements help in understanding and prediction of
consumer behaviour. Attitude refers to a predisposition to behave in a particular way when presented
with a given stimulus and the attitudes towards people, places, products and things can be positive or
negative or favourable or unfavourable.
Attitudes develop gradually as a result of experience; they emerge from interaction of a person with
family, friends, and reference groups. There are three distinct components of attitude namely, cognitive,
affective and co-native. Cognitive component is what an individual believes about an object, thing or
an event whether it is good or bad, necessary or unnecessary, useful or useless.
It is based on the reason and is linked with knowledge and about the object, thing or an event whether
it is pleasant or unpleasant, tasty how an individual responds to the object, thing or an event. It is based
on the other two components and is related with his behaviour.
Each of the three attitude components vary according to both the situation and the person. The
marketing managers success is determined partly by his ability to understand, predict and influence the
consumer attitudes.

The marketer may be interested in confirming the existing attitudes, or change in the existing attitudes
or create new attitudes depending on how his product is performing in the market.
Attitude confirmation is, perhaps, the easiest course of action which is followed in case of established
products. Such an act involves only reminding the consumers as to why they like it and why they should
continue it to purchase.
Attitude changing is more difficult task than mere confirming it. It is a change from disposition to act in
the direction of the original attitude to a disposition to act in the opposite direction.
A product disliked is to be liked by the consumers. It is really a difficult process. Attitude creation is to
make the consumers to forget the old products or brands and to make them to go in for new product or
brand entirely altogether, in fact, it is comparatively easier to create new attitudes than to change the
existing one. The most powerful instrument of attitude change and creation is advertising.
5. Personality:
Very often, the word personality is used to refer to the capacity of a person for popularity, friendliness
or charisma. However, in strict sense, it refers to the essential differences between one individual and
another.
Therefore, personality consists of the mannerisms, habits and actions that make a person an individual
and thereby serve to make him distinct from everyone else. It is the function of innate drives, learned
motives and experience.
This means that an individual responds with certain amount of consistency to similar stimuli. Personality
is the interplay of three components namely, id, the ego and the super ego.
The id governs the basic drives and the instincts of an individual. On the other hand, the super ego
disciplines the id by suppressing anti-social behaviour; it drives the individual in the direction of more
high minded pursuits of civilizations.
The ego component is the executive and makes the conscious decisions and reconciles the inflicting
demands of id and super ego, wherever necessary. For instance, id may force an individual to make
full use of consumer credit to buy an automobile, super ego dissuades such an activity as borrowing is a
kind of social sin in Indian society.
It is ego that reconciles these and works out a compromise making the individual to pay instalments
regularly without any strain on his regular budget.
The personality of an individual is either expressed in terms of traits or type. The personality traits may
be aggressiveness honesty anxiety independence sociability and so on.
The personality types may be introvert or extrovert or another classification as tradition direction outer
direction and inner direction. Each of these traits and types has been explored as the possible clues to
the behaviour of consumers.

Evaluation of personalitys role in marketing is seen in drawing consumer profiles and psychographic
market segmentation.
The Consumer Buying Decision Process
This article is the second in a series of articles about the factors and variables that
influence the behavior of consumers.
The purchase is only the visible part of a more complex decision process created by the
consumer for each buying decision he makes. But what happens before and after this
purchase? What are the factors influencing the choice of product purchased by the consumer?
Today, lets focus on the Consumer Buying Decision Process and the stages that lead a
shopper to purchase a new product.
Engel, Blackwell and Kollat have developed in 1968 a model of consumer buying decision
process in five steps: Problem/need recognition, information search, evaluation of alternatives to
meet this need, purchase decision and post-purchase behavior.
I. Need recognition / Problem recognition :
The need recognition is the first and most important step in the buying process. If there is no
need, there is no purchase. This recognition happens when there is a lag between the
consumers actual situation and the ideal and desired one.
However, not all the needs end up as a buying behavior. It requires that the lag between the two
situations is quite important. But the way (product price, ease of acquisition, etc.) to obtain this
ideal situation has to be perceived as acceptable by the consumer based on the level of
importance he attributes to the need.
For example, you have a pool and you would like someone to take care of regularly cleaning it
instead of you (ideal situation) because it annoys you to do it yourself (actual situation). But you
dont judge the way to reach this ideal situation (pay $250 / month for a specialized company)
as acceptable because its price to obtain it seems too high. Especially compared to the
relatively low level of importance you attach to it. So you wont have a purchase behavior in this
situation.
On the other hand, the ability to be able to go to your work by car in 20 minutes every morning
(ideal situation) rather than lose three hours in transit because you do not have a car and you
live in the countryside (actual situation) is something that means a lot to you. So you will have a
buying behavior to purchase a car. Even if the price is important.
In addition to a need resulting from a new element, the gap between the actual situation and the
ideal situation may be due to three cases. The current situation has not changed, but the ideal
situation has (a neighbor told you about the possibility that you did not know to clean the
pool by a specialized company). Or, the ideal situation is still the same but its the actual

situation has changed (youre tired of cleaning your pool by yourself). Or finally, the two
situations have changed.
The recognition of a need by a consumer can be caused in different ways. Different
classifications are used:
Internal stimuli (physiological need felt by the individual as hunger or thirst) which opposes
the external stimuli such as exposure to an advertisement, the sight of a pretty dress in a shop
window or the mouth-watering smell of a french pain au chocolat when passing by a bakery.
Classification by type of needs:
Functional need: the need is related to a feature or specific functions of the product or happens
to be the answer to a functional problem. Like a computer with a more powerful video card to be
able to play the latest video games or a washing machine that responds to the need to have
clean clothes while avoiding having to do it by hand or go to the laundromat.
Social need: the need comes from a desire for integration and belongingness in the social
environment or for social recognition. Like buying a new fashionable bag to look good at school
or choose a luxury car to show that you are successful in life.
Need for change: the need has its origin in a desire from the consumer to change. This may
result in the purchase of a new coat or new furniture to change the decoration of your
apartment.
The Maslows hierarchy of needs: Developed by the eponymous psychologist, this is one the
best known and widely used classifications and representations for hierarchy of needs. It
specifies that an individual is guided by certain needs that he wants to achieve before seeking
to focus on the following ones:
1. Physiological needs
2. Safety needs
3. Need of love and belonging
4. Need of esteem (for oneself and from the others)
5. Need of self-actualization
II. Information search
Once the need is identified, its time for the consumer to seek information about possible
solutions to the problem. He will search more or less information depending on the complexity of
the choices to be made but also his level of involvement. (Buying pasta requires little
information and involves fewer consumers than buying a car.)
Then the consumer will seek to make his opinion to guide his choice and his decision-making
process with:

Internal information: this information is already present in the consumers memory. It comes
from previous experiences he had with a product or brand and the opinion he may have of the
brand.
Internal information is sufficient for the purchasing of everyday products that the consumer
knows including Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods
(CPG). But when it comes to a major purchase with a level of uncertainty or stronger
involvement and the consumer does not have enough information, he must turns to another
source:
External information: This is information on a product or brand received from and obtained by
friends or family, by reviews from other consumers or from the press. Not to mention, of course,
official business sources such as an advertising or a sellers speech.
During his decision-making process and his Consumer Buying Decision Process, the consumer
will pay more attention to his internal information and the information from friends, family or
other consumers. It will be judged more objective than these from an advertising, a sellers
speech or a commercial brochure of the product.
III. Alternative evaluation
Once the information collected, the consumer will be able to evaluate the different alternatives
that offer to him, evaluate the most suitable to his needs and choose the one he think its best
for him.
In order to do so, he will evaluate their attributes on two aspects. The objective characteristics
(such as the features and functionality of the product) but also subjective (perception
and perceived value of the brand by the consumer or its reputation).
Each consumer does not attribute the same importance to each attribute for his decision and his
Consumer Buying Decision Process. And it varies from one shopper to another. Mr. Smith may
prefer a product for the reputation of the brand X rather than a little more powerful but less
known product. While Mrs. Johnson has a very bad perception of that same brand.
The consumer will then use the information previously collected and his perception or image of
a brand to establish a set of evaluation criteria, desirable or wanted features, classify the
different products available and evaluate which alternative has the most chance to satisfy him.
The process will then lead to what is called evoked set. The evoked set (aka consideration
set) is the set of brands or products with a probability of being purchased by the consumer
(because he has a good image of it or the information collected is positive).
On the other hand, inept set is the set of brands or products that have no chance of being
purchased by the shopper (because he has a negative perception or has had a negative buying
experience with the product in the past). While inert set is the set of brands or products for
which the consumer has no specific opinion.

The higher the level of involvement of the consumer and the importance of the purchase are
stronger, the higher the number of solutions the consumer will consider will be important. On the
opposite, the number of considered solutions will be much smaller for an everyday product or a
regular purchase.
IV. Purchase decision
Now that the consumer has evaluated the different solutions and products available for respond
to his need, he will be able to choose the product or brand that seems most appropriate to his
needs. Then proceed to the actual purchase itself.
His decision will depend on the information and the selection made in the previous step based
on the perceived value, products features and capabilities that are important to him.
But his Consumer Buying Decision Process and his decision process may also depend or be
affected by such things as the quality of his shopping experience or of the store (or online
shopping website), the availability of a promotion, a return policy or good terms and conditions
for the sale.
For example, a consumer committed to the idea of buying a stereo of a well-known brand could
change his decision if he has an unpleasant experience with sellers in the store. While a
promotion in a supermarket for a yogurt brand could tip the scale for this brand in the
consumers mind who was hesitating between three brands of his evoked set.
V. Post-purchase behavior
Once the product is purchased and used, the consumer will evaluate the adequacy with his
original needs (those who caused the buying behavior). And whether he has made the right
choice in buying this product or not. He will feel either a sense of satisfaction for the product
(and the choice). Or, on the contrary, a disappointment if the product has fallen far short of
expectations.
An opinion that will influence his future decisions and buying behavior. If the product has
brought satisfaction to the consumer, he will then minimize stages of information search and
alternative evaluation for his next purchases in order to buy the same brand. Which will produce
customer loyalty.
On the other hand, if the experience with the product was average or disappointing, the
consumer is going to repeat the 5 stages of the Consumer Buying Decision Process during his
next purchase but by excluding the brand from his evoked set.
The post-purchase evaluation may have important consequences for a brand. A satisfied
customer is very likely to become a loyal and regular customer. Especially for everyday
purchases with low level of involvement such as Fast-Moving Consumer Goods (FMCG) or
Consumer Packaged Goods (CPG). A loyalty which is a major source of revenue for the brand
when you combine all purchases made by customer throughout his entire life (called lifetime
customer value). The Holy Grail that all brands in the industry are trying to achieve.

Positive or negative, consumers will also be able to share their opinion on the brand. Whether in
their family or by word-of-mouth. Or on a much broader scale now with social networks or on
consumer product review websites. A tendency not to be overlooked because now with the
Internet, an unhappy customer can have a strong power to harm for a brand.
Thats why thats important for companies to have awareness of that matter. In addition to
optimizing the customer experience, a guarantee (for example, for a washing machine), an
efficient customer service and a specific call center are some of the assets that can be
developed to improve post-purchase behavior if there is any trouble with the product.
An example of Consumer Buying Decision Process
Nothing like a real example to better understand the five stages of the Consumer Buying
Decision Process. Maybe this situation sounds familiar to you.
Stage 1 Need recognition: Its sunday night. Youre hungry (internal physiological stimuli)
and there is nothing in the fridge. You will order food (statement of need).
Stage 2 Information search: You already have ordered to the Indian restaurant in your street
last month (internal information). A friend recommended a pizzeria in your neighbourhood
(external information from environment). And this morning youve found a flyer for a sushi
restaurant in your mailbox (external information from advertising).
Stage 3 Alternative evaluation: You have a bad opinion of the Indian restaurant since youve
been sick the last time (inept set). The pizzeria is both recommended by your friend and also
happens to be a well-known brand (positive perception evoked set). As for the sushi
restaurant, it got good reviews on Tripadvisor (positive perception evoked set).
Stage 4 Purchase decision: After evaluating the possibilities, youve decided to choose the
well-known pizza delivery chain. In addition, a new episode of your favorite TV show is
broadcasted tonight on TV.
Stage 5 Post-purchase behavior: The pizza was good (positive review). But you know there
was too many calories and you regret a little bit (mixed feelings about yourself). The next time
you will choose the sushi restaurant. There is less fat in sushi than pizza (next purchase
behavior)!