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Trivia
To take a holiday, today we can check on the places as well as the facilities on line and not depend on the brochures We buy tickets for movies, flights, trains, buses or taxis on line
Trivia
Today we have firms that will supply pre cut vegetables and fruits at our homes in less than 45 minutes, taking away the pain of driving out to buy the daily requirements
Trivia
A service that ensures that if you have a car but do not want to drive in the crazy traffic of Bangalore, you can hire drivers by the hour
Business Success
Depends on the marketers knowing how
What they want What they think How they work How they spend their leisure time The group influences that affect their purchases The way decisions are made How they evaluate their purchases
Consumer Behavior
It is the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs L G Schiffman, L C Kanuk
Consumer Behavior
It is the physical activity undertaken by household and business customers that result in decision and action to pay for purchase and use product and Services J N Sheth B Mittal
Customer Satisfaction
It is the individual perception of the performance of the product or service in relation to his or her expectations Based on customer satisfaction customers are:
Loyalists Apostles Defectors Terrorists Hostages Mercenaries
Customer Retention
Its important for organizations to have loyal customers as
Loyal customers buy more products They are less price sensitive and pay less attention to competitor advertising Cheaper to service existing customers Help to spread positive word of mouth
Gold
Iron Lead
What segment costs us in time, effort, and money yet does not provide the return we want? What segment is difficult to do business with?
Consumer Behavior
Consumer behavior is based on marketing theories borrowed heavily from concept developed in other scientific disciplines
Psychology study of individuals Social psychology study of how individual operates in groups Anthropology the influence of society on the individual Economics
Customer Retention
Loyal customers
Buy more products Are less price sensitive Cheaper to service Spread positive Word of Mouth
Production Concept
The consumers will favor those products that are widely available and low in cost Management in production oriented organizations concentrate on achieving high production efficiency and wide distribution coverage
Product Concept
The consumers will favor those products that offer the most quality, performance and features Management in these product oriented organizations focus their energy on making good products and improving them over time
Selling Concept
The consumers if left alone will ordinarily not buy enough of the organizations products Management must therefore undertake an aggressive selling and promotion effort
Marketing Concept
The key to achieving organizational objectives consists in determining the needs and wants of the target customer/ markets Delivering the desired satisfaction more efficiently and effectively than competitors
Products
Selling Concept
Customer Needs
Integrated Marketing
Marketing Concept
Selling to Marketing
Declining sales Slow growth Changing buying patterns Increased competition Increasing marketing expenditure
Marketing
Finance
Customer
Production
Personnel
Marketing
Customer Production
Personnel
Market Segmentation
It is the process of dividing a market into subset of consumers with common needs or characteristics
Segmentation Variables
Geographic Segmentation Region City size Nation State Climate Market density Demographic Segmentation Gender Age Race Religion Social class Family size Occupation Family life cycle Income Education Psychographic Segmentation Personality attributes Motives Lifestyle Behaviouristic Segmentation Usage volume Occasion End use Benefit sought Brand loyalty Price sensitivity
Segmentation Variables
We do have another segmentation Geo-Demographic segmentation
This involves the geographic as well as the demographic segmentation This approach says that people who stay close to one another are likely to have similar economic status, status etc.
Lifestyle Dimensions
Activities Interests Opinions Demographics
Work
Hobbies Social events Vacation
Family
Home Job Community
Themselves
Social issues Politics Business
Age
Education Income Occupation
Entertainment
Club membership Community Shopping
Recreation
Fashion Food Media
Economics
Education Products Future
Family size
Dwelling Geography City size
Sports
Achievements
Culture
VALS 2
Principle Oriented
Status Oriented
Innovators Receptive to new products, technologies. Enjoy the finer things. Skeptical of advertisers. Light TV watchers Achievers Attracted to premium products. Buy a variety of products. Read business magazines and self help books. Average TV viewers
Thinkers Not interested in status. Above average consumption of products. Like educational programs. Read widely
Experiencers Follow fashion and fads. Spend much on socializing. Buy on impulse heavy users of packaged and electronic media
Believers Look for bargains. Watch above average TV. Read general interest material.
Strivers Image concious. Limited discretionary income, use cards. Spend on clothes and personal products. Prefer TV watching
Survivors Are brand loyal. Use coupons and watch for sales. Trust advertising. Watch TV often.
Makers Shop for comfort, durability, value. Not impressed by luxury. Buy basics.
Low Resources
Benefit of Segmentation
Here customers are trying to satisfy specific needs Marketers identify consumer groups based on specific benefits Marketers must recognize that consumer preferences will change based on the benefits provided by
Changing technology Social values Competitive offers
Targeting
Targeting is selecting one or more segments identified for the company to pursue Most companies have limited resources they target a single or more segments of the market
Positioning
It is developing a distinct image for the product or service in the mind of the consumer An image that differentiate them and their offerings from their competitors It involves
Communicating the benefits that the product or services will provide to consumers Unique Selling Proposition a distinctive differentiator from competitors
Psychology
Its a study of our own thoughts, feelings, attitude and behavior, motives and goals that guide our actions Its a science that systematically studies observable human behavior and its relation with the mental process which goes on inside a human mind It seeks to understand predict and control all human activities It aims at deeper understanding of the principles that govern human behavior
Socio-Cultural Influences
Culture
Its a sum total of learned beliefs, values and customs that serve to direct consumer behavior of members of a particular society
Culture
Culture is learned
Formally
Family, older people, teachers
Informally
Imitating behavior of others
Culture
Enculturation
Learning of ones own culture
Acculturation
Learning a new culture
Attitude
Customs
Are overt modes of behavior that constitutes culturally approved or acceptable ways of behaving in specific situations
What to wear for office, temple, school, college
Rituals
Its a symbolic activity consisting of a series of steps occurring in a fixed sequence and repeated over time
Wedding Death Child birth Festivals
Measurement of Culture
Content analysis
Used to determine what social and cultural changes have occurred in society Comparison between two or more societies/ cultures
Measurement of Culture
Consumer fieldwork
Select samples of people and observe their behavior Takes place within a natural environment Performed at times without the subjects awareness Focuses on observed behavior
Subculture
Subculture
Its a distinct cultural group that exists as an identifiable segment within a larger more complex society
Various Subcultures
Nationality subcultures Religious subcultures Geographic and regional cultures Racial subcultures
Various Subcultures
Age subcultures
Tweens 8-14 year Twixters 21 29 year Older
Profile of Tweens
Know brand images better Affect their parents brand choices
Up to 80% of family brand choices
No longer expect to be informed by traditional media No concept of brand loyalty its a decision based on their peer influences Consider usage of grammatically right language as outdated Internet is the primary source of information
Various Subcultures
Sex as a subculture
Sex roles and consumer behavior
Women neatness, tactful, gentle, talkative etc. Men aggressive, competitive etc.
Cross-Cultural
Today most marketers are marketing their products beyond their countries or borders There is today a new vocabulary as in words like Glocal
Social Class
Social Class
Its the division of members of a society into a hierarchy of distinct status classes so that members of each class have relatively the same status and members of all other classes have either more or less status
Three category
Blue collar, Grey collar, White collar Lower, Middle, Upper
Four category
Lower, Lower middle, Upper middle, Upper
Socialization Process
Young Person
Family Members
Influence Basic Values/ Behavior Moral/ Religious principles Interpersonal skills Grooming standards Manners and speech Educational motivation Occupation/ Career goals Consumer behavior norms
Friends
Influence Expressive Attitude/ Behavior Style Fashion Fads In/ Out Acceptable consumer behavior
Gatekeeper
Member who controls flow of information
Deciders
Members with power to decide unilaterally
Buyers
Members who make the actual purchase
Users
Members who use or consume
Maintainers
Members who service the products to provide continuous satisfaction
Disposers
Members who decide to discontinue a product
Upward appeal
Says that the request was approved or supported by the older members/ teachers or family friends
Exchange tactics
Promise to do some chore/ work in return for the purchase
Ingratiating tactics
Try to get you in a good mood to get their way
Rational persuasion
Use logical arguments and factual evidence
Consultation tactics
Seek to involve you in their decision making process
Environmental influences Eat in front of TV Bedroom Social influences Suggest they buy food seen in ads
Consumer Motivation
Tension
Drive
Behavior
Cognitive Processes
Tension Reduction
Goals to be pursued
Dynamics of Motivation
Needs are never fully satisfied Multiplicity of needs Needs and goals vary among individuals As needs get satisfied, new needs of higher order emerge Success and failures influence goals Deprivation of primary goals may result in substitute goals assuming primary goals
Arousal of Motives
Physiological arousal
Based on individuals physiological needs
Food, sugar, sex etc.
Emotional arousal
Looking for a torrid romance people may spend excessive time on chat sites
Cognitive arousal
Digital camera that talks of high mega pixels
Environmental arousal
Need to buy a TV or a Car based on the neighbors purchase
Trio of Needs
Power Affiliation Achievement
Personality
Its those inner psychological characteristics that both determine and reflect how a person responds to his or her environment
Nature of Personality
1. Personality reflects individual differences 2. Personality is consistent and enduring 3. Personality can change, after a
a. b. c. d. Marriage Birth of a child Death of a loved one Change of job etc
Managerial Approach
The customers always adopt a systematic way of buying which may not be true They focus more on customer purchase aspects rather than consumption
Marketing Mix
Product or Service Price Place/ Distribution Promotion
External Influences
Socio-cultural Environment
1. 2. 3. 4. Family/ Informal sources Non commercial sources Social class Culture and subculture
Psychological field
1. 2. 3. 4. Motivation Perception Learning Personality/ Attitude
Need recognition
Process Pre purchase search Evaluation of alternatives
Low Involvement
Habit
Little or no Information Search No Brand Evaluation
Brand Loyalty
(Groceries, Sports shoes, Branded Garments etc)
Inertia
(Tissue napkins, Vegetables etc.)
Brand Evaluation
All Brands
Known Brands
Unknown Brands
Acceptable Brands
Unacceptable Brands
Indifferent Brands
Overlooked Brands
Purchased Brands
Psychological factors
Motivation Perception Learning Beliefs and Attitudes
Cultural factors
Culture Sub Culture Social Class
Social factors
Reference Groups Family Roles and Statuses
Personal factors
Age and Life Cycle stage Occupation Economic Circumstances Life Style Personality and Self Concept
Consumer Learning
Consumer Learning
Learning is a change in behavior occurring on account of past/ previous experience Consumers learn from their past experience and their future behavior is conditioned by these learning Its a process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior
Consumer Learning
Learning encompasses total range of learning, from simple almost reflexive response to learning abstract concepts and complex problem solving The elements of learning are
Motivation Cues Response Reinforcement
Mechanisms of Learning
Classical Conditioning Cognitive Learning Instrumental Conditioning
Classical Conditioning
Classical conditioning means response to a situation built up through repeated exposure
Unconditioned Stimulus
Smell of Dettol Phenyl smell to denote cleanliness
Conditioned stimulus
Sounding of bell at he start or end of the class Using the brand name Dettol for product extension
Stimulus generalization
Same response to slightly different stimuli
Product line, form and category extension Family branding of products Product differentiation
Cognitive Learning
Learning based on mental activity is called Cognitive Learning It holds that the kind of learning most characteristic of human beings is problem solving
Cognitive Learning
Sensory input Information processing Learning Information storing
Cognitive Learning
More experience a consumer has with a product category greater ability to use product information Some consumers learn through analogy and use that to buy products Consumers move towards products that require less effort to evaluate
Instrumental Conditioning
The stimulus that results in the most satisfying response is the one that is learned We learn to respond in a particular way because it is rewarding This results through a trial and error process
Frequent flyer programs of the airlines
Instrumental Conditioning
Try Brand A Unrewarded Legs to Loose
Try Brand B
Try Brand C
Reinforcement schedule
Continuous reinforcement fruit plate after dinner Systematic reinforcement every 3rd time of purchase one gets a gift Random reinforcement lotteries, prizes etc.
Involvement Theory
Developed from the Hemispheral Lateralization or split brain theory Left side brain is
Rational, active and realistic High involvement information processing
Product Involvement
Interested in reading about the product Read Consumer Report about the product Compared products characteristics among brands Pay attention to ads for a particular product Talk about the product with others Seek advice from others prior to purchase Take many factors into account before purchasing Spend a lot of time choosing products to buy
Habit
Its a repetitive behavior resulting in a limitation or absence of information seeking and evaluation of alternative choices by consumers
Purchase
Reinforcement
Functions of Habit
Habit performs a couple of functions It reduces purchase risk It simplifies decision making by minimizing the need for information search and could result in routine decision making
Exercise
Create an eco system to ensure that the customers are loyal to your brand.
Automobiles manufacturer Electronic goods manufacturer Garment manufacturer Petrol Pumps Restaurant Mobile services operator
Price
Price bundling
Promotion
Sampling, special discounts
Place/ Distribution
Exclusivity, improving distribution
Brand Loyalty
A customer with a high relative attitude and high degree of repeat purchase behavior would be defined as brand loyal
Brand Loyalty
Repeated Patronage
High
Low
High
Loyalty
Latent Loyalty
Spurious Loyalty
No Loyalty
Immediate
Delayed
Perception
Perception is a process by which an individual selects, organizes and interprets stimuli into meaningful and coherent picture of the world Its how we see the world around us
Perception
Two individuals may be exposed to the same stimuli under the same apparent conditions but may react differently Each person
Recognizes Selects Organizes Interprets
Sensation
Sensation is the immediate and direct response of the sensory organs to stimuli Stimulus is any unit of input as in
Products Brand names Advertisements Commercials
Absolute Threshold
The lowest level at which an individual can experience a sensation is called Absolute Threshold Different people have different absolute thresholds Under constant stimulus the absolute threshold increases the senses tend to get dulled
Seeing a series of billboards, they do not make any impression on consumers
Sensory Adaptation
As our exposure to stimulus increases we notice less Sensory Adaptation is a problem that concerns many national advertisers Hence they change their advertisements regularly
Buying all the billboards in a particular stretch to increase sensory input Taking the entire front page to advertise
Differential Threshold
The minimum difference that can be detected between two similar stimuli is called the Differential Threshold or Just Noticeable Difference (JND) This was discovered by Ernst Weber
Webers Law
It states that the stronger the initial stimulus the greater the additional intensity needed for the subsequent stimulus to be seen as different
If the cost of fresh orange juice is Rs.15/- an increase to Rs.16/- may not be noticed by consumers An increase to Rs.20/- will be noticed An increase of a single rupee for petrol will be noticed as its a significant addition to the cost as most people tend to buy it in bulk
Selective Attention
Consumers listen to the ads or products which satisfy their needs Consumers have a tendency to consciously see and hear only certain aspects of the advertisement message being communicated People are able to sense and receive only limited information from the environment Such perceptual selectivity can be associated with the inner need of an individual
Selective Exposure
Consumers will seek out messages they feel are sympathetic to their causes and action They avoid messages that are perceived to be threatening in nature to their beliefs Selective exposure is also referred to as a part of the process of cognitive dissonance
Expectation
Consumers tend to perceive products and product attributes based on their expectations
Customer who has been told that Kingfisher Airlines offer a very enjoyable traveling experience will in all probability perceive to get the same exposure when he boards the airline
Subliminal perception
People get stimulated below their conscious awareness level They can perceive without being consciously aware that they are doing so A visual stimuli presented in brief Speech given fast in low volume auditory messages Embedded or hidden imagery or words given either in print ads on product lables
Perceptual Mechanisms Received Organization Interpretation Perceptual Selection Nature of Stimulus Expectations Motives Perceptual Blocking
Perceptual Organization
Consumers do not experience all the stimuli as separate and discrete sensations They organize this stimuli into groups and perceive them as unified whole These principles were developed by Gestalt Psychologists. There are 3 basic principles:
Figure and Ground Grouping Closure
Grouping
The perceiver groups the different stimuli based on the principle of their similarity or proximity All stimuli which are grouped together are likely to be perceived as having same characteristics This facilitates easy memorizing and recall
Mobile ads showing entire family involved in the ad Message conveyed is that its a universal product can be used by all
Closure
When faced with incomplete information have the tendency to fill the gaps themselves to get a complete picture
Perceptual Interpretation
Consumers have a tendency to interpret the meaning of what they have selectively perceive and they organize these on the basis of their own assumption about the stimuli The interpretation of the stimuli is dependant on
What the individuals expect to see based on previous experience Intuition Data received Motives and interest at the time of perception
Perceptual Interpretation
Its possible that stimuli are highly ambiguous Ambiguity results in an individuals interpreting them in a way that serves to fulfill their own needs, wishes and interests There is every reason for them to be misrepresented It also depends on how clear they are
Perceptual Distortion
Physical appearance Stereotypes First impressions Jumping to conclusions Halo effect
A marketer take advantage of the halo effect when they extend a brand name to other products
Perceived Price
Consumers perceive value in a brand or product
Brands are price driven cost less than their competing brands Brand or products have unique value added services that offset their premium pricing
Attitude
Attitude
Attitude is a learned predisposition to behave in a consistently favorable way with respect to a given object
Behavior
High Involvement
Low Involvement
Experimental
Attitude Formation
Attitude formation is based on
Attitudes are learned
Buy a product or service based on their attributes Product lives up to the consumer expectation Forms positive attitude towards the product/ service
Source of influence
Family Group Advertisement/ promotion
Attitude Change
Try to bring about a change in beliefs about a brand through benefit selling Changing consumer beliefs Purchase of products for pleasure, change in attitudes is important Easier to change attitudes in low involvement products When product attributes are not too strong, easier to change attitude
Attitude Change
Fishbeins multi-attribute model Katzs functional theory of attitude Sherifs social judgement theory Heiders balance theory
Dissonance Theory
Suggests that marketers should try to reduce dissonance by providing consumers with positive information after purchase Provide info and suggestions on post purchase care and maintenance Provide warranties and guarantees Post purchase support Advertise on reliability, after sales service etc Follow up with the customer
Attribution Theory
Suggests that consumers seek to attribute causes for events after purchase
Attributing purchase to discounts
Advertise and get the consumer to realize that the product has great quality and purchase for that and not discount Advertise and get consumers to understand that products are bought for attributes especially for low involvement products
Demographic Fragmentation
Aging population Double income households Single individual households Shift in definition of middle class customers Ethnic diversity especially in metros and mini metros Geographic redistribution of population
Five category
Lower, lower-middle, middle, upper-middle, upper
Upper-Upper Class
Small number of well established families Belong to best country clubs & sponsor major charity events Serve as trustees for colleges and hospitals Maybe heads of major financial firms and long established firms Accustomed to wealth
Lower-Upper Class
Not quite accepted by the upper-upper crust of the society Represent new money Successful business executives Conspicuous user of their new wealth
Upper-Middle Class
Have neither family status or unusual wealth Career oriented with advanced degrees Young successful professionals, business owners Keen interest in obtaining better things in life Active in professional, community & social activities Their homes serves as symbols of achievements Consumption is often conspicuous
Lower-Middle Class
Highly paid blue collar workers, non managerial Want to achieve respectability Want their children to behave well Prefer neat and clean appearance Avoid highly styled clothing Mainly do it yourself people
Upper-Lower Class
Blue collared worker Strive for security View work as means to buy enjoyment Interested in items that enhance their leisure time May spend impulsively
Lower-Lower Class
Poorly educated Unskilled Often out of work Day to day existence
Work
Hobbies Social events Vacation
Family
Home Job Community
Themselves
Social issues Politics Business
Age
Education Income Occupation
Entertainment
Club membership Community Shopping
Recreation
Fashion Food Media
Economics
Education Products Future
Family size
Dwelling Geography City size
Sports
Achievements
Culture
VALS 2
Principle Oriented
Status Oriented
Innovators Receptive to new products, technologies. Enjoy the finer things. Skeptical of advertisers. Light TV watchers Achievers Attracted to premium products. Buy a variety of products. Read business magazines and self help books. Average TV viewers Strivers Image concious. Limited discretionary income, use cards. Spend on clothes and personal products. Prefer TV watching Survivors Are brand loyal. Use coupons and watch for sales. Trust advertising. Watch TV often.
Thinkers Not interested in status. Above average consumption of products. Like educational programs. Read widely Believers Look for bargains. Watch above average TV. Read general interest material.
Experiencers Follow fashion and fads. Spend much on socializing. Buy on impulse heavy users of packaged and electronic media Makers Shop for comfort, durability, value. Not impressed by luxury. Buy basics.
Low Resources