Unit - 2

Consumer Behavior
 Discussion Questions
1. How do consumer characteristics influence
buying behavior?

2. What major psychological processes influence

consumer responses to the marketing
program?

3. How do consumers make purchasing

decisions?

4. In what ways do consumers stray from a

deliberative, rational decision process?
 True or False?
 If you have bad breath, you cannot smell it
yourself.
 If you eat a balanced diet, you do not need
vitamin supplements.
 Using a razor with five blades will reduce the
likelihood of cutting yourself and will result in
less skin irritation.
 Dell Computers tend to be of higher quality than
those made by HP and Sony.
 Rust stains on clothes can be removed with the
use of lemon juice. Bleach actually makes these
stains worse.
 Consumer Behavior
The study of how individuals, groups, and organizations
select, buy, use, and dispose of goods, services, ideas, or
experiences to satisfy their needs or wants.

Consumer behaviour refers to the mental

and emotional processes and the
observable behaviour of consumers
during searching, purchasing, and post
consumption of a product or service.”
 TYPES OF CONSUMER BUYING BEHAVIOR

Routine Response/Programmed Behavior

Limited Decision Making

Extensive Decision Making

Impulse Buying
 ROUTINE RESPONSE / PROGRAMMED
BEHAVIOR Examples

 Frequently purchased low cost items.

 Low involvement required.

 Little search and decision effort
 Purchased almost automatically.
 LIMITED DECISION MAKING
Example
 Occasional buying.

 When information is needed for a

unfamiliar brand in a familiar product
category.

 Requires a moderate amount of time for

information gathering.

 Loyalty to a brand
 EXTENSIVE DECISION MAKING
 Complex process- requires high involvement
Examples

 unfamiliar, expensive, infrequently bought

products.

 High degree of economic / performance /

psychological risk.

 Lot of time spent seeking information and

deciding.
 IMPULSE BUYING
 Basis - purchase of the same product does not always

elicit the same Buying Behavior.

 Reason determines the extent of decision-making.

Examples

THIS or THIS ??
going for the dinner- reason can be an anniversary
celebration, or a meal with a couple of friends.
 FACTORS INFLUENCING CONSUMER
BEHAVIOR

Social Factors Psychological Factors Personal

Culture and Subculture Roles
and Family Social Class
Reference Groups
Factors
Motivation Perception
Demographic Factors
Learning Attitudes
Lifestyle Situational factors
Personality
Involvement Level

Consumer Decision-Making Process

Problem Information Alternatives’ Purchase Post purchase

Recognition Search Evaluation Action Actions
 Factors influencing consumer
Behavior

Cultural Factors
Personal Factors

Social Factors
 Cultural Factors
Culture is the fundamental determinant of a
person’s wants and behavior.

Culture

Marketers must closely attend to cultural

Subculture values in every country to understand
how to best market their existing products
 Cultural Factors
• Culture influences consumers through the
norms and values established by the society in
which they live.
• The sum total of knowledge, beliefs, art, morals,
laws, customs, and any other capabilities and
habits required by humans as members of
society.
• Perceptions, wants & behavior learnt by an
individual, influence his buying behavior.
• Culture reflects what to eat, what we wear, the
code of conduct, buying habits
• E.g., Kellogg’s
 Sub- Culture
• Subcultures exist within a given dominant culture.
• The group have similar habits, behavior patterns, shared
value system, buying behavior on basis of
– Nationality
– Religion
– Region
– Ethnicity
– Age
– Gender
– …and many more.
• Advertisement strategies of a firm are also affected by
subculture differences
 Social Factors
Social factors refer to forces that other people exert and
which affect consumers’ purchase behaviour

Family

Reference
Groups

Role and Status

 Reference Groups
• Groups are many like clubs, friends, schools colleges which influences
consumer socialization& learning
• Two types of reference groups
• Primary reference Groups
– Membership reference – club – regular & informal contact
– Aspiration reference group – copy the attitude & behaviour
– Disclaimant reference group – holds membership but does not belong &
opposed to group
– Avoidance group – reset the values & beliefs
• Secondary Reference Groups
– Religious group, professional & trade unions
– Opinion leaders are perceived as people with skills, knowledge
 Roles and Status
• Groups often are an important source of information and
help to define norms for behavior.
• A role consists of the activities a person is expected to
perform.
• Each role in turn connotes a status.
• People choose products that reflect and communicate
their role and their actual or desired status in society.
• Marketers must be aware of the
status-symbol potential of products
and brands.
 Joint Decision Making process
two or more persons related by
blood, marriage or adoption and
reside together

Decision-
Initiator Influencer Gatekeeper maker Buyer User
 Social Class
• ‘Social class defines the ranking of people in a society into
a hierarchy of distinct status classes;
• Upper, upper-middle, middle and lower classes, so that the
members of each class have relatively the same status
based on their power and prestige.’
• Socio economic factor – social class – Unique behaviors
• The things what consumers buying become symbols which
tell others who they are
 Personal Factors
Personal factors include those aspects that are unique to a person and
influence purchase behaviour.
These include demographic factors, lifestyle, and situational factors.

Personality

Age

Life Cycle Stage

 Personal Factors

Values
Occupation

lifestyle

Economic situation
 Psychological factors
• Psychological factors are internal to an individual
and generate forces within that influence her/his
purchase behaviour.
• The major forces include
– Motives ,
– Perception ,
– Learning ,
– Attitude , and
– Personality.
 MOTIVATION
This refers to driving forces within an individual produced by a state of
tension caused by unfulfilled needs, wants, and desires.

Learning

Unfulfilled Felt Appropriate Goal or Need

Drive
Needs, Wants Tension Behaviour Fulfillment
and Desires

Cognitive
Processes

Tension
Reduction

Motivation Process
 MOTIVATION
Freud
peoples behavior are unconscious

Maslow
driven by different needs at
different times

Herzberg
dissatisfiers from satisfiers
Abraham Maslow (1943) Need Theory
 MOTIVATION RESEARCH
 Some of the methods used to probe the subconscious mind include:
 In-depth interviews
– Talk freely by asking questions
 Association tests
– With a stimulus such as word, picture to check the first thing
comes to their mind
 Projective techniques
– Pictures & designs are used
 Focus group
– Small group brought together
 PERCEPTION
Perception is the process by which an individual selects, organizes, and
interprets stimuli into a meaningful and coherent picture of the world.

Selective Attention
allocation of
processing capacity
Selective Retention
to some stimulus People tend to remember
information that supports our
attitudes and beliefs

Subliminal Perception
are not consciously
aware of them Selective Distortion
tendency to interpret
information in a way that
fits our preconceptions
 LEARNING
Learning is viewed as a relatively permanent change in behaviour
occurring as a result information or experience, both direct and indirect.

Driver
strong internal stimulus

Cues
how a person responds

Discrimination
adjust our responses accordingly
 LEARNING
• There are two basic approaches to learning:

(1) Behavioral approach

• Stimulus – response
• Classical conditioning (Respondent conditioning)
• Favorable association with product or service

• Operant conditioning (instrumental conditioning)

• Positive or negative reinforcement

• If positive use to purchase regular, negative results in decrease

(2) Cognitive learning approach.

• Learning takes place as a result of consumer thinking & problem solving

• Consumers need to exercise some control over environment

 ATTITUDES
“An attitude is an enduring organization of motivational, emotional,
perceptual, and cognitive processes with respect to some aspect of
our environment.”

• Feeling, action & beliefs

• Research will be conducted to study consumer attitudes

 MEMORY
Memory Processes

Mental Maps

Encoding Retrieval
Association Association

Association
Association
Association

Brand Associations Brand

HYPOTHETICAL MENTAL MAP –
LIFE INSURANCE
 Buying Decision Process

Personal, commercial, public

Planned & unplanned problems Brand A or Brand B
The Buying Decision Process
Problem or need
recognition

information
search

alternatives
evaluation

purchase
decision

post-purchase
evaluation
PROBLEM RECOGNITION

“I’m Hungry”

Stimulus
• Internal - is triggered by
a person’s normal needs
• External - seeing a
commercial for a vacation
 INFORMATION SEARCH
looking for reading material, phoning friends, going online, and visiting stores to
learn about the product

Commercial Public

Experiential

Personal
SUCCESSIVE SETS INVOLVED
IN CONSUMER DECISION
MAKING
 EVALUATION OF ALTERNATIVES
No single process is used by all consumers

Beliefs
that a person holds about
something

trying to satisfy a need.

looking for certain benefits

product as a bundle of attributes
with varying abilities

Attitudes
person’s enduring favorable, emotional feelings
 EXPECTANCY-VALUE MODEL
by combining their brand beliefs — the positives and negatives —
according to importance

Attribute
Memory Graphics Size and
Price
Capacity Capacity Weight
Model Weight: 40% Weight: 30% Weight: 20% Weight: 10%
A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5

Model A = 0.4 (8) + 0.3(9) + 0.2(6) + 0.1(9) = 8.0

Model B = 0.4 (7) + 0.3(7) + 0.2(7) + 0.1(7) = 7.0
Model C = 0.4(10) + 0.3(4) + 0.2(3) + 0.1(2) = 6.0
Model D = 0.4 (5) + 0.3(3) + 0.2(8) + 0.1(5) = 5.0
PURCHASE DECISION

Purchase sub
Brand
decisions
Dealer

Quantity

Timing

Payment method

sets a minimum acceptable cutoff level for each attribute

chooses the best brand on the basis of its perceived
 POST-PURCHASE BEHAVIOR
Post-purchase Satisfaction Delighted
closeness between expectations and the
product’s perceived performance

Satisfied

Dissatisfied

Loyal

Stay or Go

Post-purchase Actions
public action by complaining to the company,
Defect going to a lawyer, stop buying the product
 How Customers
Use or Dispose of Products
consumption rate—the more quickly buyers consume a product,
the sooner they may be back in the market to repurchase it.
Moderating Effects
Low-involvement consumer

consumer involvement

Variety seeking consumer

 Types of Decision Situations
Straight Re-buy
Inventory reaches par level

Modified Re-buy
Repurchase with some minor
modifications

New Task
Item purchased for 1st time
MARKET RESEARCH
Unit – 2 Contd…
 Discussion Questions
1. What constitutes good marketing research?

2. Use of marketing research

3. What are the best metrics for measuring

marketing productivity?

4. How can marketers access their return on

investment of marketing expenditures?
 MARKETING RESEARCH SYSTEM
Market Research
to help them better understand the customers and markets

Insight
how’s and why’s certain things happen in the market
Marketing Research
It is the process of finding a solution to a
problem or a answer to question
through the use of scientific tools &
techniques

The systematic design, collection, analysis,

and reporting of data and findings
relevant to a specific marketing
situation facing the company.
 Creative Research Means
Internet sources
Check out rivals

Rivals

Marketing partners

Student projects
 BUSINESS RESEARCH
 Three major forms of business research are
 Market research
– Understanding & examining the marketplace in which company
operates
– Helps to device effective business policies & strategies
 Operations research
– Use of mathematical. Logical & analytical methods to find optimal
solutions to business problems
– Used for forecasting demand, optimizing production & investment
plans etc.,
 Motivational research
– Analyzing the reasons & motives behind people’s behavior
– Used to understand consumer behavior
Marketing Research process
Identifying & defining problem / opportunity

Planning the research design

Selecting a research method

Selecting a sampling procedure

Data collection

Evaluating the data

Preparing & presenting the research design

 DEFINE THE MARKETING PROBLEM & SET OBJECTIVE

 Problem definition
– The statement clearly defines the specific & measurable problem
that the research project has to address
– This will facilitate the company to develop appropriate marketing
plan

 Research objectives
– Who are our customers?

– Who are the customers of competing brands

– What do these customers like & dislike

– How are we currently perceived among customers

– What must we do clarify & improve the customers existing

perceptions
Focused inquiry
 CATEGORIES OF RESEARCH
 Exploratory research
– Carried out to make problem suited to more precise investigation or to frame a
working hypothesis
– It is not used in cases where a definite result is desired
– Rely upon secondary data’s
 Descriptive studies
– Comes under formal research where objectives are clearly defines
– May range general survey of consumers age, education, market potential etc.,
 Casual Research (Experimental)
– To establish cause & effect relationship between different variables
– Possible relationship can arise may be – symmetrical (Fluctuate each other),
reciprocal (mutually influence each other) & Asymmetrical (changes in one variable
are responsible for changes in another variable)
 Discotheques & parties is depend on lifestyle, Ads vs. sales, & price increases sale
increase
 DEVELOP THE RESEARCH PLAN

Research Approaches
• Observation
• Focus groups
• Surveys
• Behavioral data
Data Sources
• Experiments
• Secondary data
• Primary data

Research instrument
Sampling plan • Questionnaires
Contact method • Qualitative measures
• Technological devices
 SAMPLING DESIGN

 Who is to surveyed (Sampling Unit)

 Define the target population (universe)
 How many to survey (Sampling Size)
 The needed amount of data
 How should the respondents be chosen (Sampling procedure)
 DEFINITION

 Sample
 Is a part of total population
 It can be an individual or groups of elements
 Sample size is represented by “n”

 Sampling
 Process of selecting a sample from a
population using special techniques
 SAMPLING APPROACH
 Probability Sampling
 If the purpose of a research is to arrive at conclusion or make
predictions affecting the population as a whole

 Non – Probability Sampling

 Research purpose is directed towards evaluating how a small
representative group, is doing for purposes of illustration or
explanation
 PROBABILITY SAMPLING
 Simple random sampling
 Each element in the target population has an equal chance of inclusion in the sample
 Randomly generated or picked out of a box

 Systematic sampling
 Selection of every kth element from a sampling
 Population size / Sample size

 Stratified random sampling

 Process of grouping members of the population into relatively homogeneous subgroups
like age, gender & samples are selected randomly

 Multistage cluster sampling

 Grouping the elements in a population into various clusters & then selecting a few
clusters randomly like cities, villages etc.,
Simple random sampling
Systematic sampling

Stratified random sampling Multistage cluster sampling

 NON – PROBABILITY SAMPLING
 Convenience Sampling
 Based on their easy availability & accessibility of the researcher

 Quota Sampling
 The entire population is segmented into mutually exclusive groups or categories
 The number of respondents to be drawn from each categories is specified in
advance
 15 males & 15 females

 Judgment sampling
 Selection of unit on judgment of an experienced researcher. Mumbai

 Snowball sampling
 Involve the selection of additional respondents based on referrals of initial
respondents
 Chain system may be used when samples are not available
 COLLECT THE INFORMATION
Most expensive step
Most prone to errors
Online surveys

Telephone surveys

Interviews In-home surveys

 DATA COLLECTION INSTRUMENT

 Depends on type of research

 Mainly they use questionnaire for

quantitative study

 Questionnaire
 Set of questions to be asked from respondents
with appropriate instructions indicating which
questions to be asked
Tips to prepare Effective questionnaire
 Clear objectives

 Should be short to maintain interest

 Should be clear & understanding

 Opening statement should be minimized

 Structure questions logically like general first & important

followed by

 No suggestive type of questions

 Questions which Cross checks previous answer

 Pretest the questionnaire & then sharpen it & polish it

 Types of Measurement Scales
 Nominal scale
– Uses numbers or letters to identify different objects
– 1) 5-10, 2)11-15, 3) 16-20, 4) 21-25 etc.,
 Ordinal scale
– Used to arrange objects to some particular order
– Airtel ____ Hutch____ Idea____ BSNL____ Reliance____
 Interval scale
– Similar to ordinal but they also arrange objects in a particular objects
– Between the points on the scales are equal
– 10_____ 9______ 8_______ 7____ 6_____ 5______.......... So on
– The value of difference can be identified

 Ratio scale
– Fixed zero point & have equal intervals
– Used to calculate yards, meters, height, weight, money
 Attitude Measurement scales
 Open ended
 The respondents is free to express

 Dichotomous (Closed ended)

 Choose only one from yes or no

 Multiple item scale

 The respondent can make two or more choices

 Semantic Differential scales

 The respondent can rate on the scale divided between 1 & n
where “n” be the excellent & “1” poor
 Other Measurement Scales

 Comparative scales
 Between X & Y product

 Pictorial scales
 Constant sum scales
 Respondents are asked to divide the given numbers
among various attributes

 Likert scale
 Series of statements where the respondents provide
answer in the form of degree of agreement or
disagreement
ANALYZE THE INFORMATION

Develop summary measures

Compute averages
 Analyze the information
 Raw data does not serve the purpose of research
 Data need to be analyzed based on requirement to extract the data
satisfying objectives
 Stages of data analysis
– Validation
• Helps to confirm if the interview was really conducted
– Editing
• Checking for mistakes by respondent & interviewer
– Coding
• Assigning numbers or other symbols to answers in order to group
– Data entry
• Consistency checks & treatment of missing response
– Tabulation & analysis
• One-Way frequency tabulation & cross tabulation
PRESENT THE FINDINGS
 Present the Findings
Components of research findings
 Methodology
 Prefatory Information
– Sampling design
– Letter of transmittal
– Research design
– Title page
– Data collection
– Authorization statement
– Data analysis
– Executive summary
– Limitations
– Table of contents

 Introduction  Findings
– Problem statement  Conclusions & recommendations
– Research objectives
 Appendices
 Bibliography
 Types of presentation

 Written presentation  Visual Aids

 Oral Presentation – Tables
• Title & number
– Initial planning • Foot notes
– Preparation • Source

– Making The Presentation – Charts & graphs

• Line graphs
– Delivery
• Pie charts
• Vocal problems
• Bar charts
• Physical behaviour
• Handling Questions
 MAKE THE DECISION

Research Decisions
Research should guide decisions, not be used
to support decisions already made.
MARKETING INFORMATION SYSTEM (MKIS)
 Discussion Questions
1. What are the components of a modern marketing information
system?

2. What are useful internal records for such a system?

3. What makes up a marketing intelligence system?

4. What are some influential macroeconomic developments?

5. How can companies accurately measure and forecast

demand?
 Introduction
 What is MKIS?
 ‘MKIS (MIS) is a set of procedures and methods for the regular, planned
collection, analysis and presentation of information for use in marketing decisions

 Information about Factors that affect marketing

 Changing marketing environments

 Expanding business boundaries

 Shifts in income,

 Changing lifestyles

 By the use of technology also companies fail to gain the information that
required
 Collecting Information
Customers

External Factors
Competitors
 Marketing Information System -
consists of

People Procedures

to gather, sort, analyze,

evaluate, and distribute
information that is
needed, timely and
accurate.

Equipment
Marketing Information System –
From Where

Internal Records

Marketing Research

Insight

Marketing Intelligence
Internal Records
Order-to-Payment Cycle
the process that orders go through once
Includes invoices and shipping documents

Databases / Data Mining

such as purchase history,
product preferences

Sales Information Systems

provide managers with up-to-date information
on the current sales
 Marketing Intelligence
a set of procedures and sources that managers
use to obtain everyday information about
News and Trade Publications developments in the marketing environment

Meet with customers,

suppliers, distributors,
Monitor social and other managers
media sites
 Improving Marketing Intelligence
Sales Force
Establish industry network

Customer Advisory Panel

External Experts
Marketing Intelligence & the Internet

Independent Online Forums

Distributor or sales agents feedback sites
Customer review and expert opinion sites
Customer complaint sites
 Using Marketing Intelligence

Share Information

Quickly

should be gathered and shared with decision

makers quickly in order to effectively use the
information.
Analyzing the Macro Environment

Elements that can

impact a company,
but cannot be
controlled
 Major Environmental Forces

Demographics Economic

Technological

Natural Political-Legal
Sociocultural
 Attributes of good
marketing information

 Relevance to decision
making  Timeliness
 Confidentiality
 Objectivity (unbiased)
 Cost reasonable
 Completeness
 Reliability
 Accuracy
 Clarity
 Strategic value
 Needs and Trends

Megatrend
Changes that are slow to
Fad form but once established
Unpredictable, short-lived, and last for 7 – 10 years
without social, economic, and
political significance

Trend Offer a view of the future due to their

momentum and durability
 Estimating Future Demand

Sales Force Opinions

Buyer’s Intentions Forecasting

Past Sales Analysis

Expert Opinions