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Consumer Behavior

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

Why do we have such services and/ or products?

To cater to the changing customer requirements

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

Why Consumer Behavior?


The digital revolution has ensured that:
Consumers have more power than ever before consumers have access to more information than ever before Marketers can offer more services and products There is lot more interaction between the marketer and the customers Marketers have access to more information and lot more quickly Impact higher as technology makes it easier to connect marketers and customers

Trends in Consumer Behavior


Customer demographic trends
Trends of aging population, birth rates, rising lifestyles Working women Single and double income families Geographic redistribution of population Ethnic diversity

Technological trends Trends in ethical concern Economic integration

How can organizations retain their customers?

They can retain customers by


Providing Value Providing customer delight to retain customers

Providing Customer Value


It is defined as the ration between
Customer perceived benefits economic, functional and psychological Resources monetary, time, effort, psychological

Used to obtain those benefits

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

Expanded Customer Pyramid


Most Profitable Customers What segment spends more with us over time, costs less to maintain, and spread positive word of mouth? Platinum

Gold

Iron Lead

Least Profitable Customers

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?

Marketing Ethics & Social Responsibility


Fulfill the needs of the customers in a way that improves the society as a whole while fulfilling the objectives of the organization Exercise
Write an essay on Marketing Ethics & Social Responsibility

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

Selling & Marketing Concepts Contrasted


Focus Means Ends

Products

Selling & Promoting

Profits through Sales Volumes

Selling Concept

Customer Needs

Integrated Marketing
Marketing Concept

Profits through Customer Satisfaction

Selling to Marketing
Declining sales Slow growth Changing buying patterns Increased competition Increasing marketing expenditure

Customer as Controlling Function

Marketing

Finance

Customer

Production

Personnel

Marketing as Integrative Function


Finance

Marketing

Customer Production

Personnel

Marketing Concept Consumer Behavior


The organizations task is to determine the needs, wants and interests of the target markets Deliver the desired satisfaction more effectively than competitors in a way that preserves or enhances the consumers or societies well being. This involves
Segmenting Targeting Positioning Marketing Mix

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

Stage in life cycle

Values & Lifestyle 2 (VALS2)


Developed by Stanford Research Institute Its psychographic segmentation popularly called VALS2 VALS2 has 2 dimensions First dimension is self orientation, determines the goals and behavior Second dimension is resources

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

High Resources Action Oriented

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

Criteria for Effective Targeting of Market Segments


Identification Sufficiency Stability Accessibility

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

Models of Consumer Behavior

Models of Consumer Behavior


Economic model
Price effect, lesser the price more the purchase Lesser the price of the substitute, more the effect on the existing product More the purchasing power more the quantity purchased

Models of Consumer Behavior


Learning model
Human beings associate connection between stimulus and response This becomes a habit

Models of Consumer Behavior


Psychoanalyst model developed by Sigmund Freud. Human behavior is the outcome of
Id the source of all psychic energy which drive us to act Super ego - the internal representation of what is approved by the society Ego - the conscious directing id impulses to find gratification in a socially accepted manner

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

Role of Psychology in Marketing


Who purchases the products and services? How do they purchase them? From where do they know about the availability of products and services? From where do they purchase? Which is their most preferred brand and why? Why are they purchased? How often are they purchased?

Role of Psychology in Influencing Buying Behavior


Repetitive buying Degree of motivation Conditioning Relationship marketing Need satisfaction and buyer behavior Retention of learned information

Sociology and Consumer Behavior


Sociology is a scientific methods to study social behavior of the group To see how people behave in groups

Anthropology and Consumer Behavior


Anthropology is concerned with interaction between people and their environment especially their cultural environment
Studies the beliefs, values and customs that are passed them from their parents Culture and sub culture and their impact on ones purchase decisions

Personality and Consumer Behavior


Personality is
Individual differences Consistency Self image and self concept and its impact on purchase behavior

Perception and Consumer Behavior


Every individual perceives the world through his sense like hearing, touch, smell, sight, pain and pleasure Perception affects consumer behavior
Stereotyping

Leaning & Consumer Behavior


Learning is defined as the process by which individuals acquire the purchase and consumption knowledge and experience they apply to future related behavior

Attitudes and consumer behavior


Attitude is a set of action with an emotional overtone a condition of readiness to be motivated
Attitudes are learned through experiences Prepares a person to behave or response in a particular way Gives direction for or against something Degree of intensity, confidence

Values, beliefs and consumer behavior


General beliefs containing an individuals judgmental ideas about what is right, good or desirable Basic convictions that give us a sense of right or wrong, good or bad Specific mode of conduct or way of thinking or ones preferences in ones life

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

Cultures Influence on Behavior


Personality Traits Subjective Culture: Regional Ethnic Religious Linguistic National Professional Organizational Group Cognitive Beliefs

Attitude

Practices Behavioral Intention Values Social Norms Behavior

Belief & Values


Consist of a large no. of mental images that affect a wide range of specific attitudes that influence a person to respond in a specific way to
Product/ Services Brands People Stores

Belief & Values


Values differ from Beliefs as they
Are relatively fewer Serve as guides for culturally appropriate behavior Are enduring and difficult to change Not tied to specific objects or situations Widely accepted by members of a society

Eg: Perception as to what constitutes quality

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

Language & Symbols


Common culture requires for a common language and symbols These would mean shared meaning The marketers have to understand the language and symbols to be successful

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

Core Values Used by Marketers


Achievement and success Efficiency and practicality Material comfort Progress Individualism Freedom Humanitarianism Youthfulness Fitness and health

Subculture

Subculture
Its a distinct cultural group that exists as an identifiable segment within a larger more complex society

Relationship between Culture & Subculture

Subcultural traits of Biharis

Dominant traits of Indians

Subcultural Traits of Punjabis

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

Stereo Typical Elderly


Concerned about financial security Seek stability and secure routine Have average confidence making buying decisions Feel that one should act ones age See age as a more physical state Not innovative and adventurous in outlook

New Age Elderly


Feel financially more secure Seek new experiences and personal challenges Have greater self confidence making buying decisions Have a genuinely youthful outlook See age as a state of mind Innovative and adventurous in outlook

Marketing for Older Consumers


Look for less no. of brands Look for long established brands Are loyal to their brands

Various Subcultures
Sex as a subculture
Sex roles and consumer behavior
Women neatness, tactful, gentle, talkative etc. Men aggressive, competitive etc.

Consumer products and sex roles


Women Nurturers Men Hunters and providers

Women as depicted in Media Working women


Segmenting each of these markets

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

Cross-Cultural Consumer Analysis


Similarities and differences amongst people of different cultures Manufacturing and marketing products that can be sold across international borders Adaptive global marketing

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

Social Class & Social Status


Relative wealth, power and prestige (degree of recognition) are three status factors used while estimating social class

Status Consumption Scale


I would buy a product just because it has status I am interested in new products with status I would pay more for a product if it had status A product is more valuable to me if it had status The status of a product is irrelevant to me

Social Class Categories


Two category
Blue collar, white collar Lower, upper

Three category
Blue collar, Grey collar, White collar Lower, Middle, Upper

Four category
Lower, Lower middle, Upper middle, Upper

Upper-Upper Class Country Club Establishments


Small no. of well established families Belong to best country clubs & sponsor major charity events Serve as trustees of colleges and hospitals Prominent lawyers and physicians Heads of major financial institutions, owners of long established firms Accustomed to wealth, so do not spend conspicuously

Lower-Upper Class New Wealth


Not quite accepted by the upper crust of the society Represent New Money Successful Businessmen/ Executives Conspicuous users of their wealth

Upper-Middle Class Achieving Professionals


Have neither family nor unusual wealth Career oriented, young successful professionals Active in professional, community and social activities Want to obtain better things in life Their homes serve as symbols of their achievements Consumption often cospicuous

Lower-Middle Class Faithful Followers


Primarily non managerial white collar workers or highly paid blue collar workers Want to achieve respectability and be accepted as good citizens Want their children to be well behaved Avoid fads, are neat and clean in appearance Constitute a major market for do-it-youself products

Upper-Lower Class Security Minded Majority


Largest social class segment Blue collar, strive for security View work as means to buy enjoyment Want children to behave well Buy products that enhance their leisure time Males are sports fans

Lower-Lower Class Rock Bottom


Poorly educated unskilled workers Often out of work Children poorly brought up and treated Tend to live a day-to-day existance

Social Groups & Interpersonal Influences

Social Groups - Characteristics


Groups are two or more people who interact to accomplish either individual or mutual goals Include one sided grouping where an individual consumer observes appearance or actions of others who unknowingly serve as role models Some groups require membership status

Consumer Reference Groups


Family Friends Social class Selected sub cultures Ones own culture Other cultures

Selected Consumer Related Reference Groups


Friendship groups Shopping groups Work groups Virtual groups or communities Brand communities Consumer action groups

Celebrity & Other Reference Group Appeals


Celebrities The Expert The Common Man
Some commercials show the family solving a problem using the advertised product or service
Laundry detergent ads Breakfast cereal ads

Factors Affecting Reference Group Influences


Information and experience
Consumer who has firsthand knowledge or experience is less influenced Consumer who has no experience will be swayed by the reference group

Factors Affecting Reference Group Influences


Credibility, attractiveness and power of the reference group
If the reference group is all of the above, they can influence the consumer When consumers are concerned with acceptance or approval of others they like or identify with If the products offer them status or other benefits

Factors Affecting Reference Group Influences


Conspicuousness of the product
A luxury item or a branded product is consumed to belong to group Privately consumed product is less likely to be purchased with reference group in mind Hence branded products Identification with certain groups
Buying sports T-shirts and other products

Factors Affecting Reference Group Influences


Reference groups and consumer conformity
Ability of the reference groups to change consumer attitude and behavior by encouraging conformity Make individuals aware of a specific product or brand Provide opportunity for them to compare their thinking and attitude with that of the reference group Influence them to adopt attitudes and behavior consistent with the reference group Get them to buy the same product or service

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

Roles in Family Decision Making Process


Influencers
Members who provide information to others

Gatekeeper
Member who controls flow of information

Deciders
Members with power to decide unilaterally

Buyers
Members who make the actual purchase

Roles in Family Decision Making Process


Preparers
Members who transform products for consumption

Users
Members who use or consume

Maintainers
Members who service the products to provide continuous satisfaction

Disposers
Members who decide to discontinue a product

Roles in Family Decision Making Process


Dynamics of husband wife decision making
Husband dominated Wife dominated Joint Autonomic

Children in Family Decision Making Process


Pressure tactics
Use threat or intimidation to persuade

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

Children in Family Decision Making Process


Coalition tactics
Use others in the family to buy products

Ingratiating tactics
Try to get you in a good mood to get their way

Rational persuasion
Use logical arguments and factual evidence

Children in Family Decision Making Process


Inspirational appeal
Makes an emotional appeal or proposal that arouses enthusiasm by appealing to your values and ideas

Consultation tactics
Seek to involve you in their decision making process

Children in Family Decision Making Process - Food


Individual differences Gender

Interpersonal influencers Eat food eaten by others/ social motivation

Environmental influences Eat in front of TV Bedroom Social influences Suggest they buy food seen in ads

Strategies to influence parental decision on food purchasing

Childrens food choices

Consumer Motivation

Motivation as Psychological Force


Motivation is the driving force within that impels people to action

Motivation as Psychological Force


Learning Unfulfilled Needs, Wants & Desires
Primary Needs Acquired Needs

Tension

Drive

Behavior

Goals or Need Fulfillment

Cognitive Processes

Tension Reduction

Needs & Goals


Feedback reaction Goal Setting Formation of a Goal Action Planning Action Initiation Goal Attainment/ Failure

Goals to be pursued

What is it for which I strive?

How can I achieve my Goal?

How well have I enacted my plan?

To what degree have I achieved or failed to achieve my Goal?

Needs and Goals


Needs and goals are interdependent People are not often aware of their Needs as they are of their Goals People are more aware of their Physiological needs and not their Psychological needs

Positive & Negative Motivation


Positive drives are needs, wants, or desires
Positive goal is one towards which behavior is directed Referred to as Approach Object

Negative needs are fear or aversion


Negative goal is one towards which behavior is directed away Referred to as Avoidance Object

Rational Versus Emotional Motives


Rational motives assume that consumers
Behave rationally Carefully consider alternatives before they buy Goals are totally objective

Emotional motives assume that consumers


Behave based on subjective criteria
Pride Fear Affection Status

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

Maslows Hierarchy of Needs


Physiological needs Safety and security needs Social needs Ego needs Self actualization needs

Needs Associated with Inanimate Objects


Acquisition Conservancy Order Retention Construction

Needs Reflecting Prestige


Superiority Achievement Ambition Recognition Exhibition Accomplishment

Needs Reflecting Power


Dominance Deference Autonomy Aggression Contrarian
Act differently from others

Need for Affection


Affiliation Rejection Nurturance Play Succorance
Seek aid, protection or sympathy

Trio of Needs
Power Affiliation Achievement

Self and Self Image


Actual self image Ideal self image Social self image Ideal social self image

Altering the Self


Physical concern items
The way I look is extremely important to me I am very concerned wit my appearance It is important that I always look good

Physical view items


People notice how attractive I am People are envious of my looks My body is sexually appealing

Altering the Self


Achievement concern items
Professional achievements are an obsession with me Achieving greater success compared to my peers is important to me I want my achievements to be recognized by others

Achievement view items


My achievements are highly regarded by others I am a good example of professional success Others wish they were as successful as me

Personality & Consumer Behavior

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

Consumer Rights & Social Responsibility


Consumerism is an organized movement of citizens and government to enhance the rights and power of buyers in relation to sellers
The right to be adequately informed about the important aspects of the products The right to be protected against questionable products and marketing practices The right to influence product and marketing practices in directions that will enhance the quality of life

Consumer Rights & Social Responsibility


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Drug control Act, 1954 The prevention of food adulteration Act, 1954 The sale of goods Act, 1935 The essential commodities Act, 1955 The standard weights and measures Act, 1958 Agricultural products (grading & marketing) Act, 1937 The MRTP Act, 1969 Trade marks and merchandise marks Act, 1958 The display of prices Order, 1963 The packaged commodities (Regulation) Order, 1975 The consumer protection Act, 1986

Marketing Mix
Product or Service Price Place/ Distribution Promotion

Consumer Decision Making

Consumer Decision Making


Input

External Influences

Firms Marketing Efforts


1. 2. 3. 4. Product Price Promotion Place

Socio-cultural Environment
1. 2. 3. 4. Family/ Informal sources Non commercial sources Social class Culture and subculture

Consumer Decision Making

Psychological field
1. 2. 3. 4. Motivation Perception Learning Personality/ Attitude

Need recognition
Process Pre purchase search Evaluation of alternatives

Experience Post Decision Behavior Purchase Output Trial/ Repeat purchase

Post purchase evaluation

Types of Decision Making


High Involvement Decision Making Behavior
Information Search Evaluation of Alternatives

Low Involvement

Complex Decision Making


(Products such as automobile, Digital Camera, I-pod, TV, Computers etc.)

Limited Decision Making


(Breakfast items, Cool drinks, Snacks etc.)

Habit
Little or no Information Search No Brand Evaluation

Brand Loyalty
(Groceries, Sports shoes, Branded Garments etc)

Inertia
(Tissue napkins, Vegetables etc.)

Pricing Perceptions/ Problems


Pricing refers to consumers perception of value and sacrifice Pricing the product or services is based on
Status Perception of over or under priced

Distribution Perceptions/ Problems


Consumers prefer to shop where they feel the prices are competitive Prefers the environment which is pleasant, easily accessible, convenient parking etc Prefers outlet where all brands are available

Window Display Perceptions/ Problems


Silent visual aids Lighting Props Visual graphics Customized displays Point of purchase material

Packaging and Labeling


Packaging Protect the products Add to the products aesthetics and sales appeal Labeling Exaggerating the apparent contents of a package through subtle design Advertising

Brand Evaluation
All Brands

Known Brands

Unknown Brands

Acceptable Brands

Unacceptable Brands

Indifferent Brands

Overlooked Brands

Purchased Brands

Not Purchased Brands

Consumer Markets & Buying Behavior

Factors Influencing Consumer Behavior


Psychological factors Cultural factors Social factors Personal factors

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

Strategic Application of Classical Conditioning


Repetitive advertisement to reinforce association
Substantive variations in the advertisement across various versions

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

Models of Cognitive Learning


1. Promotional Model

3. Innovation Decision Process



Attention Interest Desire Action


Awareness Knowledge Evaluation Purchase Post purchase evaluation

Knowledge Persuasion Decision Confirmation


Awareness Interest Evaluation Trial Adoption

2. Decision Making Model

4. Innovation Adoption Model

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

Stimulus Situation (Need good looking Jeans

Try Brand B

Unrewarded Tight in Seat

Try Brand C

Unrewarded Baggy in Seat

Try Brand D Repeat Behavior

Reward Perfect Fit

Strategic Application of Instrumental Conditioning


Customer satisfaction reinforcement
Relationship marketing

Reinforcement schedule
Continuous reinforcement fruit plate after dinner Systematic reinforcement every 3rd time of purchase one gets a gift Random reinforcement lotteries, prizes etc.

Modeling or Observational Learning


Modeling is the process through which individuals learn behavior by observing the behavior of others and consequences of their behavior Models are usually the people we admire
Celebrity advertisement

Measures of Consumer Learning


Recognition and Recall measures Cognitive responses to advertising
Copy testing

Attitudinal and behavioral measures of Brand Loyalty

Involvement Theory
Developed from the Hemispheral Lateralization or split brain theory Left side brain is
Rational, active and realistic High involvement information processing

Right side brain is


Emotional, metaphoric, impulsive and intuitive Low involvement information processing

Krugmans Theory of Passive Learning


States that individuals Passively process and store right brain information (non verbal, pictorial) without active involvement TV being a visual medium is a right brain activity TV is a low involvement medium Passive learning through repeated exposure to TV commercials produces changes in consumer behavior Changes in consumer behavior occur prior to changes in the consumer attitude towards the product

Krugmans Theory of Passive Learning


Through repetition the product is paired with a visual image to produce the desired response In passive learning repetition is the key to produce purchase behavior TV commercials are most effective when they are of short duration and repeated frequently This ensures brand familiarity without provoking detailed evaluation of the message content

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

Habitual Purchasing Behavior


Need Arousal Intention to Buy

Post Purchase Evaluation Reinforcement

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

Marketing Strategy for Complex Decision Making and Habitual Purchases


Products
Diversifying the product and service mix

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

Approaches to Brand Loyalty


Creating psychological and economic barriers

Brand Loyalty
Repeated Patronage

High

Low

High

Loyalty

Latent Loyalty

Relative Attitude Low

Spurious Loyalty

No Loyalty

Brand Loyalty & Product Involvement


Hard core loyal Soft core loyal Shifting Loyalty Switchers

Types of Loyalty Programs


Timing of Reward

Immediate

Delayed

Directly supports the products value position

Retailer/ Brand manufacturer promotions (Price Promotion)

Airline frequent flyer clubs Coupons, tokens

Other indirect types of rewards

Competitions and lotteries (Instant scratches)

Multi product frequent buyer clubs

Perception & Attitudes

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

Based on their own needs, values and expectations

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

Characteristics Affecting Perception


Selective attention Selective exposure Selective reception, comprehension and retention Perceptual vigilance or defense Expectation Subliminal perception
People get stimulated below their conscious awareness level. They can perceive without being consciously aware that they are doing so.

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

Selective Reception, Comprehension & Retention


Consumers tend to be selective in their tendency to receive and retain certain information that will support their preconceptions Retain information that support their attitudes and beliefs
Consumers that are positively predisposed towards one brand will completely forget the other competing brands

Perceptual Vigilance or Defense


Consumers may subconsciously screen out the stimuli which will be psychological threatening Perceptual vigilance can be said to be in reference to the way in which consumers maintain their prior beliefs
Restaurant manager will behave properly with the customers, inspite of the customers behaving badly

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 Selection, Organization & Interpretation

Perceptual Input Stimuli

Perceptual Mechanisms Received Organization Interpretation Perceptual Selection Nature of Stimulus Expectations Motives Perceptual Blocking

Perceptual Output Behavior or Action

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

Figure and Ground


In perceiving stimuli or phenomena the tendency is to keep certain phenomena in focus and other phenomena in the background Figure is perceived to be dominant and more attention is paid to it
Brand and product is seen as a figure

Ground is given less prominence and attention and kept in background


Jingle in an advertisement is seen as ground

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

The Attitude Object


Object includes related concepts like
Product, product category, brand, services Issues, people, advertisement, price, retailers

Attitudes as Learned Predispositions


Attitudes are learned They are a direct result of direct experiences with products or exposure to advertisement They propel consumers towards a positive or negative behavior for a product

Attitudes are Consistent


Attitudes are relatively consistent They are not necessarily permanent Attitude towards a particular brand
Chinese products

Components of Consumer Attitudes


Cognitive Component (Brand beliefs)

Affective Component (Emotions/ feelings)

Conative Component (Intention to buy)

Behavior

Hierarchies of Effect on Components of Attitude


Types of hierarchy Sequence Nature of Information Processing
Active Purchase specific processing Passive Purchase specific processing Active Ongoing processing

High Involvement

Beliefs Evaluation Behavior Beliefs Evaluation Behavior Beliefs Evaluation Behavior

Low Involvement

Experimental

Role of Attitude in Developing Marketing Strategy


Knowledge of Attitude helps to Define benefit segments
Knowing benefits helps to identify key product attributes that influence consumers

Develop new products


Based on the knowledge develop new products

Develop and evaluate promotional strategies


Develop promotional strategies based on the knowledge of attitude

Relationship Belief & Attitude


Advertisers like to establish positive belief about a brand with consumers Evaluation of the brand positively results in purchase of the brand This leads to a positive attitude towards the brand

Multi Attribute Model of Attitude


This was developed by Martin Fishbein. He says that an attitude towards an object is dependent on various variables
Strength of belief that object has certain attributes Desirability of these attributes The number of attributes Eg. Mobile
Is it compact Easy to handle Enough battery life Camera etc.

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

Impact of (personal) personality


Need for cognition Emotional

Attitudes Reinforcement & Change


Its far more easier to reinforce attitude rather than change them Reinforcement happens in the form of consistent advertisement and promotion Communicating attributes that reinforce brand attributes
Health attributes for Tooth paste and Cooking oil

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

Fishbeins Multi Attribute Model


Alter the components of the Multi attribute model Changing relative evaluation of attributes Changing brand beliefs through advertisement Adding new attributes Changing the over all brand rating

Katzs Functional Theory of Attitude


Calls for changing consumer attitude towards a product or brand by making a new need prominent The utilitarian function
Consumer develops attitude because of its utility

The ego defensive function


Re-assure consumers that their self image is protected Firms marketing personal care and cosmetics appeal to the need for a favorable attitude towards their product

Katzs Functional Theory of Attitude


The value expression function
Consumers develop an attitude based on their general value, life style and outlook

The knowledge function


Positioning based on knowledge of their product benefits

Sherifs Social Judgement Theory


Says that if the change suggested in the advertisement is too extreme it will be rejected If it is moderate it falls in their latitude of acceptance Make small changes over a long period of time When consumers are more involved they are less likely to accept changes

Heiders Balance Theory


Attitudes will change to avoid conflict between beliefs and evaluation When attitudes conflict, it is easier to change them because of the consumers desire for balance

Attitude Change After Purchase


The strategy will try to counter competitor advertising which try to create doubts in the minds of the consumers Dissonance theory Attribution theory Theory of passive learning

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

Theory of Passive Learning


Link the product to an evolving cause Link the product to a particular involving advertisement Modify the importance of product benefits

Consumer Characteristics & Life Styles

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

Social Class Influences on Consumer Behavior


Its defined as the division of members of a society into a hierarchy of distinct status classes The members of each class have relatively the same status Members of other classes have either more or less status

Social Class & Status


Social status is frequently thought of as the relative rankings of members of each class in terms of specific status factors
Wealth Power Prestige

Social Class Influences on Consumer Behavior


Groups in society that can influence the buying behavior of individuals
Groups that serve as a comparison point Groups to which the individual aspires to be a member Groups whose perspectives are assumed by the individual irrespective of whether he aspires for its membership or not

Social Class Influences on Consumer Behavior


Role of opinion leaders in consumer behavior
Mukhiya, school master etc., in a vilage

Exposure of individuals to the media of communication


Type of magazines as well as other media that individuals indulge in

Influence of social class on saving and buying attitudes of individuals


Buying on cash or credit card

Variation of Social Class Categories


Two category social class
Blue collar, white collar Lower, upper

Three category social class


Blue collar, grey collar, white collar Lower, middle, upper

Four category social class


Lower, lower-middle, upper-middle, upper

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

Changing Life Styles of Indian Consumers


More involvement of males in traditional female roles Changes in female purchasing roles More focus on health and fitness Seeking spiritual peace Time pressure or time management

Lifestyle Dimensions (AIO - Inventories)


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

Stage in life cycle

Values & Lifestyle 2 (VALS2)


Developed by Stanford Research Institute Its psychographic segmentation popularly called VALS2 VALS2 has 2 dimensions First dimension is self orientation, determines the goals and behavior Second dimension is resources

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.

High Resources Action Oriented

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

Models of Consumer Behavior


Sociological model
Where family members Groups Society and ulture influence the buying behavior

Components of Psychology & their Impact of Consumer Behavior


Personality and consumer behavior Perception and consumer behavior Learning and buyer behavior Attitudes and consumer behavior Values, beliefs and consumer behavior

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