CB Notes

Consumer Behaviour 14MBAMM301
CONSUMER BEHAVIOR
Subject Code : 14MBAMM301 IA Marks : 50
No. of Lecture Hours / Week : 04 Exam Hours : 03
Total Number of Lecture Hours : 56 Exam Marks : 100
Practical Component : 01 Hour / Week
Module 1: (4 Hours)
Introduction to the study of Consumer Behaviour: Meaning & Definition of CB, Difference
between consumer & Customer, Nature & characteristics of Indian Consumers, Consumer
Movement in India, Rights & Responsibilities of consumers in India, Benefits of consumerism.
Module 2: (8 Hours)
Role of Research in understanding consumer behaviour: Consumer Research: Consumer
Research Paradigms (Qualitative & Quantitative Research Methods) Developing research
objectives, collecting secondary data, designing primary research, data analysis and reporting
research findings.
Models of Consumer Behaviour: Input-Process-Output Model, Nicosia Model, Howard Sheth
Model, Engel-Kollat-Blackwell Models of Consumer Behaviour, Internal Influences: Motivation,
Personality, Perception, Learning, Attitude, Communications, External
Influences: Social Class, Culture, REFERENCE Groups, Family members.
Levels of Consumer Decision Making – Consumer Buying Decision Process, Complex Decision
Making or Extensive Problem Solving Model, Low Involvement Decision Making or Limited
Problem Solving Model, Routinised Response Behaviour, Four views of consumer decision
making. On-line Decision Making: Meaning & Process/Stages
Situational Influences- Nature of Situational Influence (The communication Situation, The
Purchase Situation, The usage situation, The disposition situation) Situational Characteristics and
consumption behaviour (Physical features, Social Surroundings, Temporal Perspectives, Task
Definition, Antecedent States.)
Module 3: (10 Hours)
Individual Influences on Consumer Behaviour and CRM: Part 1
Motivation: Basics of Motivation, Needs, Goals, Positive & Negative Motivation, Rational Vs
Emotional motives, Motivation Process, Arousal of motives, Selection of goals.
DEPARTMENT OF MBA, RIT 1

Motivation Theories and Marketing Strategy - Maslow’s Hierarchy of Needs, McGuire’s

Psychological Motives (Cognitive Preservation Motives, Cognitive Growth Motives, Affective
Preservation Motives, Affective Growth Motives).
B) Personality: Basics of Personality, Theories of Personality and Marketing Strategy(Freudian
Theory, Neo-Freudian Theory, Trait Theory), Applications of Personality concepts in Marketing,
Personality and understanding consumer diversity (Consumer Innovativeness and related
personality traits, Cognitive personality factors, Consumer Materialism, Consumer
Ethnocentrisms), Brand Personality (Brand Personification, Gender,
Geography, Colour), Self and Self-Image (One or Multiple selves, The extended self, Altering
the self)
C) Perception: Basics of Perception & Marketing implications, Elements of
Perception(Sensation, Absolute Threshold, Differential Threshold, Subliminal Perception),
Dynamics of Perception (Perceptual Selection, Perceptual Interpretation, Perceptual
Organization ,perceived price, perceived quality, price/quality relationship, Perceived Risk,
Types of risk, How consumers’ handle risk. Customer Relationship Management Meaning &
Significance of CRM, Types of CRM (Operational, Collaborative, Analytical), Strategies for
building relationship marketing, e-CRM, Meaning, Importance of e-CRM, Difference Between
CRM & e-CRM
Individual Influences on Consumer Behaviour: Part 2
A) Learning: Elements of Consumer Learning, Motivation, Cues, Response, Reinforcement,
Marketing Applications of Behavioural Learning Theories, Classical Conditioning Pavlovian
Model, Neo-Pavlovian Model), Instrumental Conditioning, Elaboration Likelihood Model.
B) Attitude: Basics of attitude, the nature of attitude, Models of Attitude and Marketing
Implication, (Tri-component Model of attitude, Multi attribute attitude models.
C) Persuasive Communication: Communications strategy, Target Audience, Media Strategy,
Message strategies, Message structure and presentation.


External Influences on Consumer Behaviour: Part 1
A) Social Class: Social Class Basics, What is Social Class? (Social class & Social status, the
dynamics of status consumption, Features of Social Class, Five Social-Class Categories in India
B) Culture and Subculture - Major Focus on Indian Perspective Culture: Basics, Meaning,
Characteristics, Factors affecting culture, Role of customs, values and beliefs in Consumer
Behaviour.
Subculture: Meaning, Subculture division and consumption pattern in India, Types of subcultures
(Nationality subcultures, Religious subcultures, Geographic and regional subcultures, racial
subcultures, age subcultures, sex as a subculture) Cross-cultural consumer analysis: Similarities
and differences among people, the growing global middle class; Acculturation is a needed
marketing viewpoint, applying research techniques Cross-cultural marketing strategy: Cross-
cultural marketing problems in India, Strategies to overcome cross-cultural problems.
Groups: Meaning and Nature of Groups, Types Family: The changing structure of family, Family
decision making and consumption related roles, Key family consumption roles, Dynamics of
husband-wife decision making, The expanding role of children in family decision making, The
family life cycle & marketing strategy, Traditional family life cycle & marketing implications,
Reference Groups: Understanding the power & benefits of reference groups, A broadened
perspective on reference groups, Factors that affect reference group influence, Types of reference
groups, Friendship groups, Shopping groups, Work groups, Virtual groups, Consumer-action
groups, reference group appeals, Celebrities.
Consumer Influence and Diffusion of Innovations
Opinion Leadership: Dynamics of opinion leadership process, Measurement of opinion
leadership, Market Mavens, Opinion Leadership & Marketing Strategy, Creation of Opinion
Leaders. Diffusion of Innovations: Diffusion Process (Innovation, Communication channels,
Social System, Time) Adoption Process: Stages, categories of adopters

Post Purchase Processes: Post Purchase Processes, Customer Satisfaction, and customer
commitment: Post purchase dissonance, Product use and non-use, Disposition, Product
disposition.
Case studies in Indian context only (04 Hours)

Index
Sl.No Module Page No.

1 Introduction to the study of Consumer Behaviour 6-11
2 Role of Research in understanding consumer behaviour 12-42
3 Individual Influences on Consumer Behaviour and CRM: 43-86
Part 1
4 Individual Influences on Consumer Behaviour: Part 2 87-104
5 External Influences on Consumer Behaviour: Part 1 105-115
6 External Influences on Consumer Behaviour: Part 2 116-128
7 Consumer Influence and Diffusion of Innovations 129-142

Module 1
Introduction to the study of consumer behavior
Meaning:
The field of consumer behavior is the study of individuals, groups, or organizations and the
processes they use to select, secure, use, and dispose of products, services, experiences, or ideas
to satisfy needs and the impacts that these processes have on the consumer and society.
Definition:
Consumer behavior refers to the actions and decision processes of people who purchase goods
and services for personal consumption.
Difference between consumer and customer
Sl.No Customer Consumer
1 The one who buys is a customer The one who uses the product is the consumer.
2 They are the ones who consume the These are people or organizations who
products or services they have bought frequently visit the store, they purchase from
or were bought for them. you and no one else.
3 They use these products based on what The owner or storekeeper also makes sure that
they have heard or seen and apply all his/her customers are satisfied.
the information when deciding whether
they need the product or not.
4 Consumers either buy or does not buy Customers are people who buy goods and
the products that they necessarily use services, but may not use the merchandise
themselves.
5 Consumers have goals and purpose Customers buy these products and may not use
while buying items them personally, they either buy them to resell
or buy for those who want them.
6 Consumers pertain mostly to an customers can be an individual, organization or
individual or family another seller
7 Consumers play a role in the demand Customers can simply decide if this will go or
of products in the economy not.

Nature & Characteristics of Indian Consumer

The Indian consumers are noted for the high degree of value orientation. Such orientation to
value has labeled Indians as one of the most discerning consumers in the world. Even, luxury
brands have to design a unique pricing strategy in order to get a foothold in the Indian market.
Indian consumers have a high degree of family orientation. This orientation in fact, extends to
the extended family and friends as well. Brands with identities that support family values tend to
be popular and accepted easily in the Indian market. Indian consumers are also associated with
values of nurturing, care and affection. These values are far more dominant that values of
ambition and achievement. Product which communicate feelings and emotions gel with the
Indian consumers. Apart from psychology and economics, the role of history and tradition in
shaping the Indian consumer behavior is quite unique. Perhaps, only in India, one sees traditional
products alongside modern products. For example, hair oils and tooth powder existing with
shampoos and toothpaste. The characteristics of modern Indian families now closely correspond
with the concept of liberalization, individualism, tolerance of new roles, behavior and attitudes,
with a newly seen empowerment of the individual and openness to new people and experiences.
Consumer movement in India
Consumer movement is also referred as consumerism. Consumerism is an organized movement
of citizens and government to impose the rights and powers of the buyers in relation to sellers.
Consumer movement in the present form came into being only in the 1930's in the West and only
in the 60's in India. The basic objectives of consumer movement worldwide are as follows: To
provide opportunity to the consumers to buy intelligently, Recognition of reasonable consumer
requests, Protection against fraud, misrepresentation, unsanitary and unjust products.
Participation of consumer representatives in management of aspects affecting consumers
promoting consumer’s interests.
The basic reasons for the development of consumer movement in India are different from those
in the West. In western countries, consumer movement was the result of post-industrialization
affluence-for more information about the merits of competing products and to influence
producers especially for new and more sophisticated products.

In India, the basic reasons for the consumer’s movement have been:

 Shortage of consumer products; inflation of early 1970's

 Adulteration and the Black Market.
 Lack of product choices due to lack of development in technology
 Thrust of consumer movement in India has been on availability, purity and prices

The factors which stimulated the consumer movement in recent years are:
 Increasing consumer awareness
 Declining quality of goods and services
 Increasing consumer, expectations because of consumer education Influence of the

pioneers and leaders of the consumer movement
 Organized effort through consumer societies

Stages of Development of the Consumer Movement
The Consumer Movement today is undergoing a silent revolution. The movement is bringing
qualitative and quantitative changes in the lives of people enabling them to organize themselves
as an effective force to reckon with. But the path to reach this stage has not been easy. It has been
a struggle against bad business which always put profit before fairness in transactions.
The first stage of movement was more representational in nature, i.e., to make consumers aware
of their rights through speeches and articles in newspapers and magazines and holding
exhibitions.
The second stage was direct action based on boycotting of goods, picketing and demonstration.
However, direct action had its own limitations that led to the third stage of professionally
managed consumer organizations. From educational activities and handling complaints, it
ventured into areas involving lobbying, litigation and laboratory testing. This gave good results.
Thus, for instance business sector has started taking notice and co-operating with the movement.
It has played a role in hastening the process of passing the Consumer Protection Act, 1986 which
has led to the fourth stage. The Act enshrines the consumer rights and provides for setting up of
quasi-judicial authorities for redressal of consumer deputes. This act takes justice in the socio-
economic sphere a step closer to the common man.
Rights and responsibilities of consumers in India

Rights of Consumers
The various rights of consumers that are recognized by Government of India.

(i) Right to safety: Consumers have a right to be protected against marketing of goods which are
injurious to health and life. As a consumer if you are conscious of this right, you can take
precautions to prevent the injury or if injury is caused in spite of precaution, you have a right to
complain against the dealer and even claim compensation. For example, if you buy any
medicine, the pharmacy selling it can be held responsible if the medicine proves harmful. Again
if gas cylinder is used for cooking, you have to check that it does not leak when it is supplied to
you. If it starts leaking afterwards, the supplier will be liable to pay compensation if the leakage
of gas leads to fire and causes injury or death to anyone.
(ii) Right to be informed: Consumers also have the right to be informed about the quantity,
quality, purity, standard or grade and price of the goods available so that they can make proper
choice before buying any product or service. Also, where necessary, the consumer must be
informed about the safety precautions to be taken while using the product to avoid loss or injury.
Taking the example of gas cylinder again, the supplier must inform the user to stop the flow of
gas with the help of the regulator when it is not in use.
(iii) Right to choose: Every consumer has the right to choose the goods needed from a wide
variety of similar goods. Very often dealers and traders try to use pressure tactics to sell goods of
poor quality. Sometimes, consumers are also carried away by advertisements on the TV. These
possibilities can be avoided if consumers are conscious of this right.
(iv) Right to be heard: This right has three interpretations. Broadly speaking, this right means
that consumers have a right to be consulted by Government and public bodies when decisions
and policies are made affecting consumer interests. Also, consumers have a right to be heard by
manufactures, dealers and advertisers about their opinion on production and marketing decisions.
Thirdly, consumers have the right to be heard in legal proceedings in law courts dealing with
consumer complaints.
(v) Right to seek redressal: If and when any consumer has a complaint or grievance due to
unfair trade practices like charging higher price, selling of poor quality or unsafe products, lack
of regularity in supply of services etc. or if he has suffered loss or injury due to defective or
adulterated products, he has the right to seek remedies. He has a right to get the defective goods
replaced or money refunded by the seller or dealer. He also has the right to seek legal remedies in
the appropriate courts of law. Through this right the consumers are assured that their

complaints will receive due attention. This right also provides for due compensation to
consumers if they have suffered a loss or are put to inconvenience due to the fault of the supplier
or manufacturer.
(vi) Right to consumer education: To prevent market malpractices and exploitation of
consumers, consumer awareness and education are essentially required. For this purpose,
consumer associations, educational institutions and Government policy makers are expected to
enable consumers to be informed and educated about (a) the relevant laws which are aimed at
preventing unfair trade practice; (b) the ways in which dishonest traders and producers may try
to manipulate market practices to deceive consumers; (c) how consumers can protect their own
interest; and (d) the procedure to be adopted by consumers while making complaints. Steps have
been already taken by many consumer bodies to educate consumers through pamphlets, journals
and posters. TV programmes have also come to play an effective role in this connection.
Responsibilities of Consumers
There is a well-known saying that ‘there cannot be rights without responsibilities’. Having
examined the consumer rights and the purpose served by them, it is necessary to consider
whether consumers should also be responsible enough to be entitled to exercise their rights. For
instance, to be able to exercise their right to be heard, consumers should avail of the
opportunities to know and keep informed about consumer problems. To exercise their right to
seek redressal of complaints, consumers must take all precautions to choose the right goods at
the right price and learn how to use the products to prevent injury or loss. Specifically, the
responsibilities of consumers may include the followings:
(i) Responsibility of self-help It is always desirable that a consumer should not depend on the
seller for information and choice as far as possible. As a consumer, you are expected to act in a
responsible manner to protect yourself from being deceived. An informed consumer can always
take care of his/her interest more than anyone else. Also, it is always better to be forewarned and
forearmed rather than getting remedies after suffering a loss or injury.
(ii) Proof of Transactions: The second responsibility of every consumer is that the proof of
purchase and documents relating to purchase of durable goods should be invariable obtained and
preserved. For example, it is important to get a cash memo on purchase of goods you should
remember that in case you have to make any complaint about defects in goods, the proof of

purchase will enable you to establish your claim for repair or replacement of the goods.
Similarly, durable consumer goods like TV, refrigerator, etc. carry warranty /guarantee cards
issued by the dealers. The cards entitle you to get the service for repairs and replacement of parts
free of cost during a certain period after purchase.
(iii) Proper claim: Another responsibility that consumers are expected to bear in mind is that
while making complaints and claiming compensation for loss or injury, they should not make
unreasonably large claims. Very often, consumers have to exercise their right to seek redressal in
a court. There have been cases in which consumers claimed huge compensation for no apparent
reason. This is regarded as an irresponsible act which should be avoided.
(iv) Proper use of Product/services: Some consumers, especially during the guarantee period,
make rough use of the product, thinking that it will be replaced during the guarantee period. This
is not fair on their part. They should always use the products properly. Besides the above
responsibilities, consumers should be conscious of some other responsibilities. They should stick
to the agreement made with manufacturers, traders and service providers. They should make
timely payment in case of credit purchases. They should not tamper with the media of services,
like electric and water meters, bus and train seats, etc. They should remember that they can
exercise their rights only when they are willing to fulfill their responsibilities.
Benefits of Consumerism
1. The consumer chooses his/her lifestyle – what goods are necessary and what luxuries
can be afforded.
2. The opportunity to enjoy this world (food, drink, entertainment) in various quantities.
3. Economic advantages to a large segment of the population (middle- and upper-class).

4. The opportunity and motivation to improve your social standing by working hard.

Module-2
Role of research in understanding consumer behavior
Consumer research
The action or activity of gathering information about consumers' needs and preferences,
especially in relation to a particular product or service.
Consumer research paradigms
The research paradigm in the study of consumer behavior focuses on two approaches viz.,
Quantitative research, used by the positivists and, Qualitative research: used by the
interpretivists. The positivists and interpretivists as two schools of thought have already been
discussed in the previous lesson. The current approach or the ‘dialectic’ approach to studying
Consumer Behavior makes use both the approaches.
a) Quantitative Research in Consumer Behavior:
As the name suggests, the approach makes application of quantitative research techniques to the
study of Consumer Behavior. It comprises (i) research techniques that are used to gather
quantitative data over large samples randomly, and (ii) statistical tools and techniques, inclusive
of survey techniques, observation and experiments. This type of research is descriptive and
empirical in nature. It is primarily used by the positivists while studying consumer behavior, with
a focus on prediction of consumer behavior. The findings can be generalized to marketing
situations. As mentioned above, the quantitative techniques are also used by “dialectics”.
b) Qualitative Research in Consumer Behavior:
This approach makes application of qualitative research techniques to the study of Consumer
Behavior. It comprises (i) research techniques that are used to gather qualitative data over small
samples randomly and, (ii) non-statistical tools and techniques, inclusive of depth interviews,
focus group, projective techniques and even observation. The type of study is subjective and
non-empirical in nature. It lays emphasis on the holistic “what, where, when, why and how” of
human behavior”. The focus is on understanding consumption behavior and consumption
patterns. The objective is to gain an understanding of consumer behavior and the underlying
causes that govern such behavior. The approach assumes that all marketing situations are unique;
and, hence the findings cannot be generalized to marketing situations. This approach is primarily

used by the interpretivists while studying consumer behavior. However, as mentioned above, the
qualitative techniques are also used by “dialectics”.
Combining Qualitative and Quantitative Research
Today, the two approaches are used in combination to study consumer behavior. Qualitative
research is very often a prelude to quantitative research; the findings from qualitative research
are used to prepare scales for surveys and experiments.In some cases quantitative research may
also act as a precursor to qualitative research; the findings from quantitative research are
corroborated through case studies and other qualitative measures.
Consumer research process:
The important steps in the consumer research process are
1. Defining the objectives of the research
2. Collecting and evaluating secondary data
3. Designing a primary research study
4. Collecting primary data
5. Analyzing the data
6. Preparing the report on findings
Developing the research objectives:
It is first and the most difficult step in research process hare the questions like is it to segment the
market for plasma television sets? To find out consumer attitude about the experience with online
shopping?. And it is always important for the marketing manager to agree at the out set on the
purposes and the objectives of the study to ensure that
Collecting secondary data
Secondary data includes both internal and external data it is collected or generated for some
purposes other than the present research objectives.
Internal secondary data such information as data generated in house for earlier studies
for earlier studies as well as analisis of customer files, such as past customer transactions etc.
Designing primary research:
IT IS basically designed on the basis of the purposes of the study. If the descriptive study is
needed then the quantitative study is likely to be under taken. If the purpose is of the new ideas
then we can go for the qualitative research.

 Quantitative research design

A quantitative research study consists of research design, the data collection methods and
instruments to be used, and the sample design. Three basic designs are used in quantitative
research are: observation, experimentation, or survey.
 Observational research
Here in this method the people or customers are observed when they are purchasing the product
or using the product
 Mechanical observation
Uses a mechanical or electronic device to record customer behavior or responses to a particular
marketing stimulus.
 Experimentation
It is possible to test the relative sales appeal of many types of variables, such as package designs,
prices promotional offers, or copy themes through experiments designed to identify cause and
effect.
 Surveys
There are various survey methods are there they are,
• Personal interview survey
• Telephone survey
• Mail surveys
• Online surveys
Quantitative research data collection instruments
The data collection instruments are developed to as part of a study’s total research design
systematizing the collection of data and to ensure that all respondents are asked the same
questions in the same order.
 Questionnaire
For quantitative research the primary data collection instrument is questionnaire
 Attitude scales
The instruments most frequently used to capture this evaluative data is called attitude scales the
most frequently attitude scales are likert scales, semantic differential scale, behavior intension
scale, and rank order scale.

Consumer research process
Data collection methods

The important methods of data collection in this research design are depth interview, focus
group, discussion guides, projective techniques and metaphor analysis. These techniques are
regularly used the early stages of attitude research to pinpoint relevant product related beliefs and
to develop an initial picture of consumer attitude.
 Depth interview:
This is a lengthy non structured interview between a respondent and highly trained interviewer,
who minimizes his own participation in the discussion after establishing the general subject to be
discussed
 Focus group:
this consist of 8 to 8 to10 respondents who meet with a moderator analyst for a group discussion
“focused” on a particular product or product category.
 Projective techniques:

This is designed to tap the underlying motives of individuals despite their unconscious
rationalizations or efforts at conscious concealment.
Metaphor analysis: in the 1990, a stream of consumer research emerged suggesting the most
communication is nonverbal and that people do not think in words but in images.
Data analysis and reporting research findings
In qualitative research, the moderator usually analyses the responses received. In quantitative
research, the research supervises the analysis open ended questions are first coded and classified
then all of the responses are tabulated and analyzed. Using sophisticated analytical programs that
correlate the data by selecting variables and cluster the data by selected demographic
characteristics.
Models of consumer behavior
The consumer market is defined as end user markets. Also called Business to Consumer markets,
or B2C markets, the product and service offering is bought by the consumer for his personal use.
The decision making process in consumer markets is different from the one that takes place in
business or industrial markets.
Input-Process-Output model
1. Nicosia Model:
The model proposed by Francesco Nicosia in the 1970s, was one of the first models of
consumer behavior to explain the complex decision process that consumers engage in
during purchase of new products. Instead of following a traditional approach where the
focus lay on the act of purchase, Nicosia tried to explain the dynamics involved in
decision making. Presenting his model as a flow-chart, he illustrated the decision making
steps that the consumers adopt before buying goods or services; decision aiming was
presented as a series of decisions, which follow one another. The various components of
the model are seen as interacting with each other, with none being essentially dependent
or independent; they are all connected through direct loops as well as feedback loops.
Thus, the model describes a flow of influences where each component acts as an input to
the next. The consumer decision process focuses on the relationship between the
marketing organization and its consumers; the marketing organization through its

marketing program affects its customers; the customers through their response to the
marketer’s action, affects the subsequent decisions of the marketer; the cycle continues.
The various components that are further distinguished into main fields and subfields of
the model are marketer's communication affecting consumer’s attitude, consumer's search
and evaluation, purchase action, consumption experience and feedback. The first field
ranges from the marketer (source of message) to the consumer (attitude); the second from
the search for to the evaluation of means/end(s) relation(s) which forms the reaction field;
the third field relates to the act of purchase; and the fourth to feedback. The output from
one field acts as the input for the next. These are explained as follows:
1. Marketer's communication affecting consumers’ attitude: This comprises Field 1 (i.e.
“from the source of a message to the consumers’ attitude”). The consumer is exposed to the
firm’s attributes through the marketing communication; this marketing communication could
take place impersonally via mass media (TV, newspaper, websites, etc) as well as personally. The
information could relate to the firm attributes as well as the product, price and distribution.
This message relating to the firm’s attributes affects the consumers’ perception, predisposition
and attitude toward the firm and its offering. Of course, the impact on perception and attitude is
also dependent upon the consumer’s personal characteristics, values, experiences, culture, social
influences etc. Thus, the marketer’s communication affects the consumers’ attitude.
2. Consumer's search and evaluation: After an attitude is formed, the consumer moves to Field
2 of the model, i.e. the consumer’s search for and evaluation of means/end(s) relation(s) which
forms the preaction field. The consumer searches for information about the product category and
the varying alternatives, and thereafter evaluates the various brands on criteria like attributes,
benefits, features etc. These criteria could be based on his learning and past experiences as well
as the marketer's inputs. This step creates a motive in the mind of the consumer to purchase the
product.
3. Purchase action: The motivated state leads to Field 3 of the model, i.e. the decision making
on the part of the consumer and the act of purchase. The consumer finally gets into action and
buys the product from a chosen retailer.
4. Consumption experience and feedback: The purchase action leads a consumer to Field 4 of
the model which is consumption experience and feedback. After purchasing the product, and the

resultant consumption, the consumer may have two kinds of experiences. A positive experience
in terms of customer satisfaction may reinforce his predisposition with the product/brand and
make him loyal towards it. A negative experience on the other hand, implying consumer
dissatisfaction would affect his attitude negatively, lower down evaluations about the
product/brand and even block his future purchases. This Filed provides feedback to the marketer,
who can modify its mix accordingly.
In the first field, the marketer communicates with the customer and promotes an unfamiliar
product to him; depending upon the existing predispositions and his evaluation, the consumer
develops an attitude. In the second field, the consumer searches for information and evaluates it
based on his attitudes; thereafter, he develops a motivation to act. In the third field, he makes and
purchase and in the fourth field, he would provide feedback and also memorize his experience
and learning for future use. Thus, the firm communicates with consumers through its marketing
messages and the consumers react through an act of purchase. Both the firm and the consumer
influence each other.
However, the model suffers from limitations in the sense that the model proposes
assumptions, boundaries and constraints that need not be realistic. It has been argued that
attitude, motivation and experience may not occur in the same sequence. Variables in the model
have not been clearly defined. Factors internal to the consumer have not been defined and dealt
with completely. The mathematical testing of the model and its validity are questionable.
2. Howard Sheth Model
Howard and Sheth used the term buying behavior and not consumer behavior as the industrial
buyers and consumers are similar in most aspects. While the model was proposed in the 1960s,
for industrial buying, the term “buyer” is used to connote both industrial consumers and personal
consumers. Through the model, Howard and Sheth, tried to explain buyer rationality while
making purchase decisions even in conditions of incomplete information. While they
differentiated between three levels of decision making, EPS, LPS and RPS, the model focuses on
repeat buying/purchase.
The model has four major components, viz., stimulus inputs (input variables), hypothetical
constructs, response outputs (output variables), and, exogenous variables.

a) Stimulus inputs (Input variables): The input variables refer to the stimuli in the environment;
they take the form of informative cues about the product/service offering; these information cues
could relate to quality, price, distinctiveness, service and availability.
The informational cues could be Significative, Symbolic, (both of which are commercial
and can be controlled by the marketer) and Social (non-commercial and uncontrollable by the
marketer; family, reference groups and social class). All these three types of stimuli provide
inputs concerning the product/brand to a consumer.
- Significative stimuli: The product/brand information that the marketer provides, comprises the
significative component; it deals essentially with the brand characteristics.
- Symbolic stimuli: this is the psychological form with which a buyer perceives the product and
service offering (brand); it is figurative (verbal and visual product characteristics) and perceptual
and depends on how the offering has been positioned; it emanates from advertising and
promotion efforts.
-Social stimuli: this is the information about the product or service offering that comes from the
social environment viz. family, groups, society and culture at large.
b) Hypothetical constructs: Howard and Sheth classified the hypothetical constructs into two
major groups, viz., perceptual constructs and learning constructs. These constitute the central
part of the model and deal with the psychological variables which operate when the consumer is
undergoing the decision making process.
- Perceptual constructs: The perceptual constructs deal with how a consumer obtains and
processes information received from the input variables. Once the buyer is exposed to any
information, there is an attention; this attention towards the stimuli depends on the buyers’
sensitivity to information in terms of his urge and receptivity towards such information. Not all
information would be processed and the intake of information is subject to perceived uncertainty
and lack of meaningfulness of information; this is referred to as stimulus ambiguity. This reflects
the degree to which the buyer regulates the stimulus information flow. Stimulus ambiguity
occurs when a consumer does not understand the message from the environment; it could trigger
off a need for a specific and active search for information and thus lead to an overt search for
information. The information that is gathered and processed may suffer from perceptual bias if

the consumer distorts the information received so as to fit his/her established

needs/beliefs/values/experiences etc.
- Learning constructs: The learning constructs relate to buyer learning, formation of attitudes and
opinions, and the final decision. The learning constructs are seven in number, and range from a
buyer’s motive for a purchase to the final satisfaction from a purchase; the interplay of these
constructs ultimately leads to a response output or a purchase. The motives refer to the goals that
a buyer seeks to achieve through a purchase and the corresponding urge towards action or the
purchase activity. The brand comprehension is the knowledge and information that the buyer has
about the various brands in his evoked set. The buyer forms an order of preference for the
various brands; this order of preference is based on the choice criteria (decision mediators). The
decision mediators are the evaluative criteria and the application of decisions rules by the buyer
to the various purchase alternatives.
Based on the choice criteria, the attitudes are formed for the varying brands. The attitudes reflect
the predisposition of the buyer; preference toward alternative brands; and, feelings of like/dislike
towards the offerings. The brand potential of the evoked set determines the buyer's perception
and confidence level of the brands that he is considering to purchase. The purchase intention is a
cumulative outcome of the interaction of buyer motives, choice criteria, brand comprehension,
resultant brand attitude and the confidence associated with the purchase. Satisfaction, another
learning construct, involves the post purchase evaluation (whether expectation from an offering
matches the performance) and resultant impact (positive/negative) on brand comprehension.
c) Response outputs (output variables): The output variables refer to the buyer’s action or
response to stimulus inputs. According to Howard and Sheth, the response outputs comprise five
constituents, viz., attention, comprehension, attitude, intention and purchase. These could be
arranged in a hierarchy, starting from attention and ending up with purchase.
- Attention refers to the degree or level of information that a buyer accepts when exposed to a
stimulus. It reflects the magnitude of the buyer's information intake.
- Comprehension is the amount of information that he actually processes and stores; here, it
refers to brand comprehension which is buyers’ knowledge about the product/service category
and brand.

- The attitude is the composite of cognition, affect and behavior towards the offering; the attitude
reflects his evaluation of the brand and the like/dislike based on the brand potential.
- Intention refers to the buyer’s intention to buy or not to buy a particular offering.
- Purchase behavior refers to the actual act of buying. The purchase behavior is a cumulative
result of the other four constituents.
d) Exogenous variables: The Howard and Sheth model also comprises certain constant
exogenous variables that influence some or all of the constructs explained above, and thereby
impact the final output variables. These are explained as Inhibitors or environmental forces that
restrain the purchase of a favored brand; eg., importance of the purchase, price, financial status
of the buyer, time at the disposal of the buyer, personality traits, social pressures etc.
Working relationship between constructs and the model:
Through their model, Howard and Sheth explain the buying decision process that a buyer
undergoes, and the factors that affect his choice decision towards a brand. The process starts
when the buyer is exposed to a stimulus. As a result of the exposure, stimulus ambiguity occurs,
which leads to an overt search for information. The information that is received is contingent
upon the interplay between the attitudes and the motives. In other words, the search for
information and the conclusions drawn would be filtered by perceptual bias (that would be a
result of attitude, confidence, search and motives). It may alter the existing patterns of motives
and choice criteria, thereby leading to a change in the attitude towards the brand, brand
comprehension, motives, purchase intention and/or action. The final purchase decision is based
on the interaction between brand comprehension, strength of attitudes towards the brand,
confidence in the purchase decision and purchase intention. The actual purchase is influenced by
the buyer's intentions and inhibitors, which he confronts. The entire process is impacted by
various exogenous variables like the importance of purchase, price, time available to make the
purchase, social and cultural influences etc. After the purchase, the buyer experiences
satisfaction if the performance matches and exceeds expectation; this satisfaction would
strengthen brand comprehension, reinforce the confidence associated with the buying situations,
and strengthen the intention to repeat purchase of the brand. With a satisfying purchase decision,
the buyer learns about buying in similar situations and the behavior tends to get routinized. The
purchase feedback thus influences the consumers’ attitudes and intention.

Engel, Blackwell and Kollat’s Model: Engel-Blackwell-Miniard Model of Consumer

Behavior:
The Engel, Kollat and Blackwell Model, also referred to as the EKB model was proposed to
organize and describe the growing body of knowledge/research concerning consumer behavior. A
comprehensive model, it shows the various components of consumer decision making and the
relationships/interactions among them. The model went through many revisions and
modifications, with attempts to elaborate upon the interrelationship between the various
components and sub-components; and, finally another model was proposed in the 1990s which
came to be known as the Engel, Blackwell and Miniard Model (EBM).
The model consists of five parts, viz. information input, information processing, decision process
stage, decision process variables, and external influences.
1. Information input: The information input includes all kinds of stimuli that a consumer is
exposed to and triggers a kind of behavior. The consumer is exposed to a large number of stimuli
both marketing (advertising, publicity, personal selling, demonstrations, store display, point of
purchase stimuli) as well as non-marketing sources (family, friends, peers); thus the various
stimuli compete for consumer’s attention. These stimuli provide information to the consumer and
trigger off the decision making process.

2. Information processing: Stimuli received in the first stage provide information; the
information is processed into meaningful information. The stage comprises consumer’s
exposure, attention, perception/comprehension, acceptance, and retention of information. The
consumer is exposed to stimuli (and the accompanying information); attention determines which
of the stimuli he will focus upon; thereafter he would interpret and comprehend it, accepts it in
his short term memory and retains it by transferring the input to long-term memory.
3. Decision-process stage: At any time during the information processing, the consumer could
enter into this stage. The model focuses on the five basic decision-process stages, viz., problem
recognition, search, alternative evaluation, choice, and outcomes (post-purchase evaluation and
behavior).
There is problem recognition; this is followed by a search for information, which may be internal
based on memory. The search of information is also impacted by environmental influences.
Thereafter, the consumer evaluates the various alternatives; while evaluation, belief lead to the
formation of attitudes, which in turn affect the purchase intention. The next stage is the choice
and purchase, which gets impacted by individual differences. Finally there is an outcome, in the
form of satisfaction and dissatisfaction. This outcome acts as a feedback on the input and impacts
the cycle again. Environmental influences, individual differences and social influences, directly
and indirectly influence each of the stages of the decision process.
However, EKB proposed that it is not necessary for every consumer to go through all the five
stages; it would depend on whether the problem is an extensive or a routine problem-solving
behavior.
4. Decision process variables: The model proposes individual influences that affect the various
stages of the decision making process. Individual characteristics include constructs like
demographics, motives, beliefs, attitude, personality, values, lifestyle, normative compliance, etc.
5. External influences: The model also proposes certain environmental and situational
influences that affect the decision making process. The environmental influences include
“Circles of Social Influence,” like culture, sub-culture, social class, reference groups, family and
other normative influences; situational influences include consumer’s financial condition.
Working relationships between Components and the model

The decision process comprises five stages from need recognition to outcome. The outcome in
the form of satisfaction/dissatisfaction acts as the input in then next cycle of a similar purchase.
Each of the components is directly or indirectly impacted by environmental influences,
individual differences and social influences.
Internal Influences
Motivation
Motivation is the driving force among individual consumers that impel them to action.

A motive is a construct representing an unobservable inner force that stimulates and
compels a behavioral response and provides specific direction to that response.

Motivation is an inner drive that reflects goal-directed arousal. In a consumer behavior
context, the results is a desire for a product, service, or experience.

It is the drive to satisfy needs and wants, both physiological and psychological, through
the purchase and use of products and services
Five stages of the motivation process:
 Latent need
 Drive
 Want or desire
 Goal
 Behavior
Personality

Personality can be described as the psychological characteristics that both determines and
reflect how a person responds to his or her environment.

How Personality is help full in marketing: Because no two people are exactly the same,
marketers can look for certain similar personality traits in different consumers. These
consumers can then be grouped together based on this identified personality.

Product Personality includes: manly, adventurous, sporting, stylish, mature, etc.

Colour can influence our emotions, our actions and how we respond to various people,
things and ideas.


Brand personality means assigning human personality traits/characteristics to a brand so as
to achieve differentiation. These characteristics signify brand behaviour through
individuals representing the brand.
Perception
 Perception is defined as the process by which an individual selects, organize and interprets
stimuli into a meaningful and coherent picture of the world.
 It can be described as “how we see the world around us”. In general, perception is
gathering information through our senses, which are seeing, hearing, touching, tasting,
smelling and sensing.
Learning

Learning can be viewed as a relatively permanent change in behavior occurring as a result
of experience.

From a marketing perspective, however, consumer learning can be thought of as the
process by which individuals acquire the purchase and consumption knowledge and
experience that they apply to future related behavior.

Consumer learning is a process; that is, it continually evolves and changes as a result of
newly acquired knowledge.

Both newly acquired knowledge and personal experience serve as feedback to the
individual and provide the basis for future behavior in similar situations.
Elements of Learning:


Motivation: Motivation is based on needs and goals. Motivation acts as a spur to learning.
The degree of relevance, or involvement, determines the consumer’s level of motivation
to search for knowledge or information about a product or service.

Cues: In the marketplace, price, styling, packaging, advertising, and store displays all serve
as cues to help consumers fulfil their needs in product-specific ways. Cues serve to
direct consumer drives when they are consistent with consumer expectations. Marketers
must be careful to provide cues that do not upset those expectations.

Response: How individuals react to a drive or cue-how they behave constitutes their
response.

Reinforcement: Reinforcement increases the likelihood that a specific response will occur
in the future as the result of particular cues or stimuli
Attitude

Consumer attitude is a learned predisposition to respond in a consistently favourable or un-
favourable manner with respect to a given object.

Thus, an attitude is the way we think, feel, and act toward some aspect of our environment.

Attitude occurs within and are affected by situations. By situations it means events or
circumstances that at a particular point in time, influence the relationship between an
attitude and behavior.

By keeping in touch with changing consumer attitudes, marketers are better able to appeal
to consumers through their marketing messages and appeals.
Product/Service Situations Attitude
D Cold Total Running Nose I’ve got an important meeting in 2hrs….
Hyuandi Cars Buying a new car I would like to buy a new car for my family….
LIC Insurance Life Insurance Now that I am father I want to make sure that
my family is provided for…

Spice Jet Family wedding My cousin is getting married and I want to be

there.
Communications
 The transmission of a message from a sender to a receiver via a medium of

transmission.
Communication and Marketing Strategy
 Establish communication objectives
 Select target audience
 Choose the best media
 Develop suitable message strategies
 Match message with audience characteristics
 Develop suitable message structure, presentation
 Develop suitable message appeals
 Reduce barriers to effective communication
 Measure effectiveness of marketing communications
External Influences
Social class
Social classes are defined as groups more or less homogenous and ranked against each other
according to a form of social hierarchy. Even if it’s very large groups, we usually find similar
values, lifestyles, interests and behaviors in individuals belonging to the same social class.
We often assume three general categories among social classes: lower class, middle class and
upper class.
People from different social classes tend to have different desires and consumption patterns.
Disparities resulting from the difference in their purchasing power, but not only. According to
some researchers, behavior and buying habits would also be a way of identification and
belonging to its social class.
Beyond a common foundation to the whole population and taking into account that many
counterexample naturally exist, they usually do not always buy the same products, do not choose

the same kind of vacation, do not always watch the same TV shows, do not always read the same
magazines, do not have the same hobbies and do not always go in the same types of retailers and
stores.
For example, consumers from the middle class and upper class generally consume more balanced
and healthy food products than those from the lower class.
They don’t go in the same stores either. If some retailers are, of course, patronized by everyone,
some are more specifically targeted to upper classes such as The Fresh Market, Whole Foods
Market, Barneys New York or Nordstrom. While others, such as discount supermarkets, attract
more consumers from the lower class.
Some studies have also suggested that the social perception of a brand or a retailer is playing a
role in the behavior and purchasing decisions of consumers.
In addition, the consumer buying behavior may also change according to social class. A
consumer from the lower class will be more focused on price. While a shopper from the upper
class will be more attracted to elements such as quality, innovation, features, or even the “social
benefit” that he can obtain from the product.
Culture
Culture is crucial when it comes to understanding the needs and behaviors of an individual.
Throughout his existence, an individual will be influenced by his family, his friends, his cultural
environment or society that will “teach” him values, preferences as well as common behaviors to
their own culture.
For a brand, it is important to understand and take into account the cultural factors inherent to
each market or to each situation in order to adapt its product and its marketing strategy. As these
will play a role in the perception, habits, behavior or expectations of consumers.
For example, in the West, it is common to invite colleagues or friends at home for a drink or
dinner. In Japan, on the contrary, invite someone home does not usually fit into the local
customs. It is preferable to do that this kind of outing with friends or colleagues in restaurant.
A significant specificity to take into account for the brands in markets such as savory snacking or
sodas and alcoholic beverages. Usage and consumption moments are not the same in all regions
of the world.
While if a Japanese offer you a gift, the courtesy is to offer him an equivalent gift in return.

McDonald’s is a brilliant example of adaptation to the specificities of each culture and each
market. Well aware of the importance to have an offer with specific products to meet the needs
and tastes of consumers from different cultures, the fast-food giant has for example: a
McBaguette in France (with french baguette and Dijon mustard), a Chicken Maharaja Mac and a
Masala Grill Chicken in India (with Indian spices) as well as a Mega Teriyaki Burger (with
teriyaki sauce) or Gurakoro (with macaroni gratin and croquettes) in Japan.
While all the ingredients used by McDonald’s in arabic and muslim countries are certified halal.
The fast food chain not offering, of course, any product with bacon or pork.
Reference groups
The membership groups of an individual are social groups to which he belongs and which will
influence him. The membership groups are usually related to its social origin, age, place of
residence, work, hobbies, leisure, etc...
The influence level may vary depending on individuals and groups. But is generally observed
common consumption trends among the members of a same group.
The understanding of the specific features (mindset, values, lifestyle, etc..) of each group allows
brands to better target their advertising message.
More generally, reference groups are defined as those that provide to the individual some points
of comparison more or less direct about his behavior, lifestyle, desires or consumer habits. They
influence the image that the individual has of himself as well as his behavior. Whether it is a
membership group or a non-membership group.
Because the individual can also be influenced by a group to which he doesn’t belong yet but
wishes to be part of This is called an aspirational group. This group will have a direct influence
on the consumer who, wishing to belong to this group and look like its members, will try to buy
the same products.
For example, even if he doesn’t need it yet, a surfing beginner may want to buy “advanced”
brands or products used by experienced surfers (aspirational group) in order to get closer to this
group. While a teen may want the shoe model or smartphone used by the group of “popular
guys” from his high school (aspirational group) in order to be accepted by this group.
Some brands have understood this very well and communicate, implicitly or not, on the “social
benefit” provided by their products.

Within a reference group that influence the consumer buying behavior, several roles have been
identified:
 The initiator: the person who suggests buying a product or service
 The influencer: the person whose point of view or advice will influence the buying
decision. It may be a person outside the group (singer, athlete, actor, etc..) but on which
group members rely on.
 The decision-maker: the person who will choose which product to buy. In general, it’s the
consumer but in some cases it may be another person. For example, the “leader” of a
soccer supporters’ group (membership group) that will define, for the whole group, which
supporter’s scarf buy and bear during the next game.
 The buyer: the person who will buy the product. Generally, this will be the final consumer.
Many brands look to target opinion leaders (initiator or influencer) to spread the use and
purchase of their product in a social group. Either through an internal person of the group when it
comes to a small social group. Or through a sponsorship or a partnership with a reference leader
(celebrity, actor, musician, athlete, etc..) for larger groups.
Family members
The family is maybe the most influencing factor for an individual. It forms an environment of
socialization in which an individual will evolve, shape his personality, acquire values. But also
develop attitudes and opinions on various subjects such as politics, society, social relations or
himself and his desires.
But also on his consumer habits, his perception of brands and the products he buys.
We all kept, for many of us and for some products and brands, the same buying habits and
consumption patterns that the ones we had known in our family.
Perceptions and family habits generally have a strong influence on the consumer buying
behavior. People will tend to keep the same as those acquired with their families.
For example, if you have never drunk Coke during your childhood and your parents have
described it as a product “full of sugar and not good for health”. There is far less chance that you
are going to buy it when you will grow up that someone who drinks Coke since childhood.

For brands – especially for Fast-Moving Consumer Goods (FMCG) or Consumer Packaged
Goods (CPG) – successfully “integrate” the family is both a real challenge and an opportunity to
develop a strong consumer loyalty among all the family members.
That’s why it’s important for brands to be seen as a family brand in order to become a consumer
habit for parents and children when they will become adult.
Levels of consumer decision making
Consumer Buying Decision Process
I. Need recognition / Problem recognition:

The need recognition is the first and most important step in the buying process. If there is no
need, there is no purchase. This recognition happens when there is a lag between the consumer’s
actual situation and the ideal and desired one.
However, not all the needs end up as a buying behavior. It requires that the lag between the two
situations is quite important. But the “way” (product price, ease of acquisition, etc.) to obtain this
ideal situation has to be perceived as “acceptable” by the consumer based on the level of
importance he attributes to the need.
For example, you have a pool and you would like someone to take care of regularly cleaning it
instead of you (ideal situation) because it annoys you to do it yourself (actual situation). But you
don’t judge the “way” to reach this ideal situation (pay $250 / month for a specialized company)
as “acceptable” because its price to obtain it seems too high. Especially compared to the

relatively low level of importance you attach to it. So you won’t have a purchase behavior in this
situation.
On the other hand, the ability to be able to go to your work by car in 20 minutes every morning
(ideal situation) rather than lose three hours in transit because you do not have a car and you live
in the countryside (actual situation) is something that means a lot to you. So you will have a
buying behavior to purchase a car. Even if the price is important.
In addition to a need resulting from a new element, the gap between the actual situation and the
ideal situation may be due to three cases. The current situation has not changed, but the ideal
situation has (a neighbor told you about the possibility – that you did not know – to clean the
pool by a specialized company). Or, the ideal situation is still the same but it’s the actual
situation has changed (you’re tired of cleaning your pool by yourself). Or finally, the two
situations have changed.
The recognition of a need by a consumer can be caused in different ways. Different
classifications are used:
 Internal stimuli (physiological need felt by the individual as hunger or thirst) which
opposes the external stimuli such as exposure to an advertisement, the sight of a pretty
dress in a shop window or the mouth-watering smell of a french “pain au chocolat” when
passing by a bakery.
 Classification by type of needs:
o Functional need: the need is related to a feature or specific functions of the
product or happens to be the answer to a functional problem. Like a computer
with a more powerful video card to be able to play the latest video games or a
washing machine that responds to the need to have clean clothes while avoiding
having to do it by hand or go to the laundromat.
o Social need: the need comes from a desire for integration and belongingness in
the social environment or for social recognition. Like buying a new fashionable
bag to look good at school or choose a luxury car to “show” that you are
successful in life.

o Need for change: the need has its origin in a desire from the consumer to change.
This may result in the purchase of a new coat or new furniture to change the
decoration of your apartment.
 The Maslow’s hierarchy of needs: Developed by the eponymous psychologist, this is one
the best known and widely used classifications and representations for hierarchy of
needs. It specifies that an individual is “guided” by certain needs that he wants to achieve
before seeking to focus on the following ones:
o 1. Physiological needs
o 2. Safety needs
o 3. Need of love and belonging
o 4. Need of esteem (for oneself and from the others)

o 5. Need of self-actualization
II. Information search

Once the need is identified, it’s time for the consumer to seek information about possible
solutions to the problem. He will search more or less information depending on the complexity
of the choices to be made but also his level of involvement. (Buying pasta requires little
information and involves fewer consumers than buying a car.)
Then the consumer will seek to make his opinion to guide his choice and his decision-making
process with:
 Internal information: this information is already present in the consumer’s memory. It
comes from previous experiences he had with a product or brand and the opinion he may
have of the brand.
Internal information is sufficient for the purchasing of everyday products that the consumer
knows – including Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods
(CPG). But when it comes to a major purchase with a level of uncertainty or stronger
involvement and the consumer does not have enough information, he must turns to another
source:
 External information: This is information on a product or brand received from and
obtained by friends or family, by reviews from other consumers or from the press. Not to
mention, of course, official business sources such as an advertising or a seller’s speech.

During his decision-making process and his Consumer Buying Decision Process, the consumer
will pay more attention to his internal information and the information from friends, family or
other consumers. It will be judged more “objective” than these from an advertising, a seller’s
speech or a commercial brochure of the product.
III. Alternative evaluation
Once the information collected, the consumer will be able to evaluate the different alternatives
that offer to him, evaluate the most suitable to his needs and choose the one he think it’s best for
him.
In order to do so, he will evaluate their attributes on two aspects. The objective characteristics
(such as the features and functionality of the product) but also subjective (perception and
perceived value of the brand by the consumer or its reputation).
Each consumer does not attribute the same importance to each attribute for his decision and his
Consumer Buying Decision Process. And it varies from one shopper to another. Mr. Smith may
prefer a product for the reputation of the brand X rather than a little more powerful but less
known product. While Mrs. Johnson has a very bad perception of that same brand.
The consumer will then use the information previously collected and his perception or image of a
brand to establish a set of evaluation criteria, desirable or wanted features, classify the different
products available and evaluate which alternative has the most chance to satisfy him.
The process will then lead to what is called “evoked set”. “The evoked set” (aka “consideration
set”) is the set of brands or products with a probability of being purchased by the consumer
(because he has a good image of it or the information collected is positive).
On the other hand, “inept set” is the set of brands or products that have no chance of being
purchased by the shopper (because he has a negative perception or has had a negative buying
experience with the product in the past). While “inert set” is the set of brands or products for
which the consumer has no specific opinion.
The higher the level of involvement of the consumer and the importance of the purchase are
stronger, the higher the number of solutions the consumer will consider will be important. On the
opposite, the number of considered solutions will be much smaller for an everyday product or a
regular purchase.
IV. Purchase decision

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

when you combine all purchases made by customer throughout his entire life (called “lifetime
customer value”). The “Holy Grail” that all brands in the industry are trying to achieve.
Positive or negative, consumers will also be able to share their opinion on the brand. Whether in
their family or by word-of-mouth. Or on a much broader scale now with social networks or on
consumer product review websites. A tendency not to be overlooked because now with the
Internet, an unhappy customer can have a strong power to harm for a brand.
That’s why that’s important for companies to have awareness of that matter. In addition to
optimizing the customer experience, a guarantee (for example, for a washing machine), an
efficient customer service and a specific call center are some of the assets that can be developed
to improve post-purchase behavior if there is any trouble with the product.
Complex decision making or extensive problem solving
When consumers have no established criteria for evaluating a product category or specific brands
in that category or have not narrowed the number of brands they will consider to a small,
manageable subset, their decision-making efforts can be classifies as extensive problem solving.
At this level, the consumer needs a great deal of information to establish a set of criteria on
which to judge specific brands and a correspondingly large amount of information concerning
each of the brands to be considered.
Limited problem solving
At this level of problem solving, consumers already have established the basic criteria for
evaluating the product category and the various brands in the category. However, they have not
fully established preferences concerning a select group of brands. Their search for additional
information is more like “fine-tuning”; they must gather additional brand information to
discriminate among the various brand.
Routinized response behavior
At this level, consumers have experience with the product category and a well established set of
criteria with which to evaluate the brands they are considering. In some situations, they may
search for a small amount of additional information; in others, they simply review what they
already know.

Four views of consumer decision making

Economic view is a rational model that consumers can make a rational decision after he know all
product, understanding their benefits and disadvantages. The consumer has his own subjective
choice depend on all the information that he knows.
In passive view, consumers made decisions according to the promotional efforts of marketers. It
is opposite of the rational model, but it is unrealistic as consumers have ability to get the
information and purchase decisions.
In cognitive view, is the best of the four model. In this model, decision-makers are not according
to their own purposes and different choices, but they make decisions based on their own interest
and the understanding of demand. Every marketer should help consumers to develop “shortcut
decision rules to race decision-making process and information overload.”
Emotional view: Consumers use less time to think about whether the product is necessary for
them or not. When consumers make decision in this model, they are quite impulsive and have
emotions with purchases or possessions. Such as someone who buy the luxury products without
considering the value of the luxury itself and the necessity of buying luxury products. “Some
examples of undesirable attributes of negative emotions include delaying a consumer decision to
get medical tests when the tests might indicate a serious illness, or avoiding the decision to
purchase technology when the product is rapidly evolving due to the negative emotional factors
of anticipated regret, confidence, and stress.”
Online decision making
Meaning
The thought process of selecting a logical choice from the available options.
When trying to make a good decision, a person must weightthe positives and negatives of each
option, and consider all the alternatives. For effective decision making, a person must be able to
forecast the outcome of each option as well, and based on all these items, determine which
option is the best for that particular situation.
Process/stages
Interactions that help customers choose a product or service.

Interactive product selector

Call-back facility


Chat facility

Customer rating systems

On-site search engines: site maps

E-mail a friend facility

Interactive Tools: Visa and Immigration
Situational Influences
The Nature of Situational Influences
• Situational influence includes all those factors particular to a time and place that do not
follow from a knowledge of the stable attributes of the consumer and the stimulus and
that have an effect on current behavior.
• Consumers often behave very differently depending on situation.
The Communications Situation
 The situation in which consumers receive information has an impact on their behavior.
 Marketers attempt to place ads in appropriate media contexts to enhance effectiveness.
 Movie ads are strategically place so that consumers see them on their way to and from
work
The Purchase Situation
 The situation in which a purchase is made can influence consumer behavior.
 Marketers must adapt strategies to the purchase situation.
 Home purchases occur in a unique social situation.
 To succeed, realtors must take the opportunity to develop interpersonal relationships.
The Usage situation
Marketers need to understand the usage situations for which their products are, or may become,
appropriate.
 Research indicates that expanded usage situation strategies can produce major sales
gains.
 Classic: Arm and Hammer baking soda, where many uses have been found and marketed
resulting in increased sales.

The Disposition situation

 Consumers must frequently dispose of products or product packages.
 Disposal can create significant social problems as well as opportunities for marketers.
 Some consumers consider ease of disposition an important product attribute.
Situational Characteristics and Consumption Behavior
Physical Surroundings
 Atmospherics is the sum of all the physical features of a retail environment.
 Atmospherics influences consumer judgments of the quality of the store and the store’s
image.
 Atmosphere is referred to as e servicescape when describing a service business such
Colors
 Certain colors and color characteristics create feelings of excitement and arousal which
are related to attention.
 Brighter colors are more arousing than dull ones.
 Warm colors such as reds and yellows are more arousing than cool colors such as blues
and grays. Hospital, bank or restaurant.
Aromas
 There is increasing evidence that odors can affect consumer shopping. Several aroma
studies have found the following:
 A scented environment produced a greater intent to revisit the store, higher purchase
intention for some items, and a reduced sense of time spent shopping.
 A pleasantly scented environment enhanced brand recall and evaluations particularly for
unfamiliar brands.
Music
 Music influences consumers’ moods, and in turn, influences a variety of consumption

behaviors.
 Firms exist to develop music programs to meet the unique needs of specific retailers.
 An emerging trend is having music more in the foreground so it becomes part of the
shopping experience and drives store image.

Crowding
 Most consumers find feelings of crowding to be unpleasant resulting in:

o Less time in the store and less buying
o Faster decisions and less use of information
 Crowding can lead to less satisfactory purchases, unpleasant shopping, and reduced
likelihood of returning to the store.
 Marketers need to design outlets to reduce crowding perceptions.
Social Surroundings
 Social surroundings are the other individuals present in the particular situation.
 Social influence is a significant force.
 Individuals tend to comply with group expectations, particularly when the behavior is
visible.
 Shopping is a highly visible activity.
 The use of many publicly consumed brands are subject to social influences.
Examples of social surroundings
 Types of customers in the store
 Queues and crowding
 Whether the consumer is likely to be known by others/recognised
 Whether there are high-profile people/celebrities shopping at that store
 Whether the product will be consumed privately or in the presence of others
Embarrassment is a negative emotion influenced both by the product and the situation.
 Social Surroundings Certain products are more embarrassing than others, and
 Embarrassment is driven by the presence of others.
 For extremely sensitive products, strategies include home delivery options.
Temporal Perspectives
 Temporal perspectives deal with the effect of time on consumer behavior.
 Limited purchase time often limits search
 Internet shopping is growing rapidly as a result of the time pressures felt by consumers.
Examples of temporal influences

 Whether the product is seasonal

 Whether the product is urgently required (snack between lectures)
 Time available for shopping limited/excess (the product may be an excuse for shopping)
 How long the previous product lasted or was expected to last
Task Definition
 Task definition is the reason the consumption activity is occurring.
 Major distinction between purchases for self-versus gift.
 Consumers give gifts for many reasons:
o social expectations o
Ritualized situations
o To elicit return favors
Examples of task influences
 Is the product utilitarian or used as a status symbol?
 Is it a gift or for oneself?
 Must the product be long-lasting/tough? (e.g. an everyday watch) or decorative?

(e.g. a dress watch)
 Is the product intended for several uses? (e.g. a family computer for study and internet
access)
Antecedent States
 Antecedent states are features of the individual person that are not lasting characteristics
Examples of antecedent states
Moods
 Feeling sad triggers buying sweets or seeing a funny movie
 Feeling rejected triggers buying games’ software
o Momentary conditions
 Can’t eat ice cream because teeth hurt
 Can’t buy a book because the credit card was left at home
 Buy more groceries because hungry before shopping
 Moods

 Moods tend to be less intense than emotions and may operate without the individual’s
awareness.
 Although s moods may affect all aspects of a person’s behavior, they generally do not
completely interrupt ongoing behavior as an emotion might.
 Consumers actively manager their d mood states, often seeking situations, activities, or
objects that will alleviate negative s moods or enhance positive ones.
Momentary Conditions
 As with moods, individuals attempt to manage their momentary conditions, often through
the purchase or consumption of products and services.
 Thus, a great deal of marketing activity is directed toward momentary conditions.

Module 3
Individual Influences on Consumer Behaviour and CRM: Part 1
Motivation
Basics of Motivation
Motivation is the driving force within individuals that impels them to action.
This driving force is produced by a state of tension, which exists as the result of an unfulfilled
need. Individuals strive both consiciously and subconsciously to reduce this tension through
behavior that they anticipate will fulfill their needs ans thus relieve them of the stress they feel.
Needs
At the heart of marketing, lies what is referred to as a consumer need. Consumer needs are the
quintessence of the marketing concept. Psychologists and consumer researchers agree that
human beings have the same needs; however, these needs gets translated differently into different
wants, resulting in varied motives. With consumers being different and unique to each other, it is
important that the marketers understand the various needs, and provide relevant product and
service offerings that blend with the consumer(s) segment(s) and their wants. An understanding
of human needs and motives would also help marketers understand and to predict consumption
behavior.
The two terms “need” and “want” often used interchangeably hold two different meanings. A
need is a state of felt deprivation while a want is a desire for a specific satisfier.
Example: A person is hungry.
Need: Hunger
Want: The person may desire Chapaati Sabji or a Dosa or a Sandwich. The various options are
the wants.
A want may further get translated into a brand too, eg., the person desires a Dosa but from
Shanthi Sagar or a Udipi.
While needs lie at the core of marketing, marketers can never create needs. Needs pre-exist a
marketer. They are already known and experienced by consumers. At times, however consumers
fail to identify needs as the needs lie at the sub conscious level and remain unfelt. In such cases,
a marketer can just help a consumer identify such needs.

The entire need want goal action satisfaction chain comprises the cognition, affect and
behavior components within an individual; however, the process gets started with cognition, and
therefore marketers need to inform and educate the consumers about their product/service
offerings and the marketing mix.
Needs are primarily of two types, viz., physiological needs and psychological needs. People
possess and experience a variety of such needs simultaneously.
a) Physiological needs: As the name suggests, these needs arise out of our physiology and are
also called as primary or biological or biogenic needs; eg. Need for food, water, sleep, air, shelter
etc. We are born with such needs and these are innate in nature. In order to survive, these needs
must be fulfilled. As human beings are all similar, thus, we are also similar in so far as these
needs are concerned.
b) Psychological needs: These needs arise out of our sociology and psychology and as such they
are also called secondary or psychogenic needs; eg. Need for affiliation, power, recognition,
esteem and status, etc. During the period of socialization, we acquire such needs; and human
beings differ amongst each other in so far as these needs are concerned.
Goals: The goal is manifested after the need and want are identified. In fact our actions to
purchase/ consume are all goal directed. A goal is the ideal state that a person desires as he thinks
that it would help him satisfy a need. A product/service offering and the value proposition is a
means to provide such benefits that the consumer utilizes to achieve his goals.
Goals are of two types, generic goals and product-specific goals.
a) Generic goals: Generic goals can be defined as the general category of goals that consumers
see as a means to satisfy their needs and wants. For example, a consumer may want to buy a cell
phone.
b) Product-specific goals: These are specifically branded products or services that the consumers
select to fulfill the generic goal. For example, the consumer would want to buy a Nokia or a
Samsung.
Nature of goals
a) Multiplicity and Selection of Goals: A need/want may be fulfilled through attainment of
various goals. For example, thirst may be quenched with water, a fruit juice, a cola; and even

within fruit juice, the choice could vary amongst many like orange juice, lime juice, or mixed
fruit juice.
A consumer is thus exposed to a multiciplicity of goals that could all be equally appropriate and
attractive. However, the awareness about such multiple goals would vary from person to person
based on learning and experience. Even the selection of a goal out of the many would vary across
people as it would depend on factors like his purchasing power, personal preferences and
choices, experience of self as well as social influences, lifestyle and values, and socio-cultural
norms and practices.
b) Conflicting needs and goals: A consumer may often find himself amidst conflicting needs and
goals at the same time or at various times, and this leads to what is referred to as an intra-
individual conflict, something that the person feels within himself. Conflicting goals could lead
to three types of intra individual conflict:
i) Approach-approach conflict: In the approach-approach conflict, the consumer finds himself in
a situation where he has to make a choice between two desirable alternatives each of which are
equally attractive. However, due to constraints, he cannot choose both the options. Example: A
person wants to buy fulfill his esteem need. He can either buy a Merc or a BMW, but cannot buy
both because of his limited resources. Another example could be that a person is hungry and is
tempted to have both a pizza and a burger.
ii) Approach-avoidance conflict: Here the consumer is faced with an option that has both a
positive and a negative to it, i.e., the goal presents something attractive, yet something
unattractive to it. Thus the person is both attracted towards a goal as well as repelled by it. For
example, a person wants to buy a new television set with the best of features and quality sound.
He is presented with various alternative brands. He is tempted to buy a Sony Bravia but he also
knows that it would cost a premium and would be more expensive than other brands. While Sony
as a brand depicts high quality, it also costs more. The situation would further get complicated if
the dealer informs him of a scheme that if he leaves Sony and buys a Samsung TV, he gets a free
DVD player. This is called a double approach-avoidance conflict. Another example is that a lady
wants to have an ice-cream but is also concerned about the fact that it would mean adding to
calories and weight.

iii) Avoidance-avoidance conflict: The avoidance-avoidance conflict involves choosing between

two equally unattractive and undesirable alternatives; it is a situation where you choose between
the devil and the deep sea. The consumer is faced with two options, each of which he wants to
discard. For example, the doctor prescribes to a patient of a long drawn treatment based on
medicines with lower rate of success as against another option of a surgical procedure with high
risk of post-operative complications.
Positive and Negative Motivation
Motivation can take a positive as well as a negative form and correspondingly a positive and
negative direction respectively.
a) Positive motivation: The person is driven towards an object/condition/situation. Example: A
person goes to the gym three times a week to build up his body and muscles so that he can look
good. The object in question (gym, work out, good body) is referred to as an approach object.
His behavior is directed towards achievement of a positive goal, which is fitness, body building
and great looks.
b) Negative motivation: Here, the person is driven away from an object/condition/situation, and
the corresponding effects of non usage. For example, a person decides to buy Pepsodent
toothpaste for his child as it helps fight germs and tooth decay whole day long. His behavior is
directed towards the object (Pepsodent) to avoid a negative goal, which is tooth decay.
Motives
Rational Vs Emotional motives
Motives can be rational as well as emotional.
a) Rational: When consumer motives are objective, and when selection of goals is made on the
basis of objective criteria, they are referred to as rational motives. These criteria could be price,
size, weight etc.
b) Emotional: When consumer motives are subjective, and when selection of goals is made on
the basis of personal and subjective criteria, like appearance and looks, colour, aesthetics etc.,
they are referred to as emotional motives.
Motivation Process
The motivational process is the steps that you take to get motivated. It is a process, that when
followed produces incredible results. It is amazing what you can do if you are properly

motivated, and getting properly motivated is a matter of following the motivational process. Like
any other process it takes a little work and foresight and planning on your part. However, the
return on your investment of time is significant, and it is important when needing extra
motivation that you apply the motivational process.
In the initiation a person starts feeling lacknesses. There is an arousal of need so urgent, that the
bearer has to venture in search to satisfy it. This leads to creation of tension, which urges the
person to forget everything else and cater to the aroused need first. This tension also creates
drives and attitudes regarding the type of satisfaction that is desired. This leads a person to
venture into the search of information. This ultimately leads to evaluation of alternatives where
the best alternative is chosen. After choosing the alternative, an action is taken. Because of the
performance of the activity satisfaction is achieved which than relieves the tension in the
individual.
Arousal of motives
Most of the individual’s specific needs are dormant much of the time. The arousal of any
particular set of needs at a specific moment in time may be caused by internal stimuli found in
the individual’s physiological condition, by emotional or cognitive processes, or by stimuli in the
outside environment.


Physiological arousal
Bodily needs at any one specific moment in time are based on the individual’s physiological
condition at that moment. A drop in blood sugar level or stomach contraction will trigger
awareness of hunger need. A decrease in body temperature will induce shievering, which makes
the individual aware or need for warmth.

Emotional arousal
Sometimes daydreaming results in the arousal or stimulation of latent needs. People who are
bored or who are frustrated in trying to achieve their goals often engage in daydreaming (autistic
thinking), in which they imagine themselves in all sorts of desirable situations. These thoughts
tend to arouse dornamant needs, which may produce uncomfortable tensions that drive them into
goal-oriented behavior. A young woman who daydreams of a torrid romance may spend her free
time in internet single chat rooms; a young man who dreams of being a famous novelist may
enroll in a writing workshop.

Cognitive arousal
Sometimes random thoughts can lend to a cognitive awareness of needs. An

advertisement that provides remainders of home might trigger instant yearning to speak
with one’s parents. This is the basis for many long-distance telephone company
campaigns that stress the low cost of international long-distance rates.

Environmental (or situational) arousal
The set of needs an individual experiences at a particular time are often activated by
specific cues in the environment. Without the cues, the needs might remain dormant. For
example, the 6 o’clock news, the sight or smell of bakery goods, the end of the school
day- all of these may arouse the “need” for food. In such cases, modification of the
environment may be necessary to reduce the arousal of hunger.
Selection of goals
For any given need, there are many different and appropriate goals. The goals selected by
individuals depend on their personal experiences, physical capacity, prevailing cultural norms
and values, and the goal’s accessibility in the physical and social environment. For example, a
young women may wish to get a deep, even tan and may envision spending time in the sun as a
way to achieve her goal. However, if her dermatologist advises her to avoid direct exposure to

the sun. She may settle for a self-tanning cosmetic product instead. The goal object has to be
both socially acceptable and physically accessible. If cosmetic companies did not offer effective
alternatives to tanning in the sun, our young women would have to either ignore the advice of her
dermatologist or select a substitute goal, such as untanned (but undamaged) youthful-looking
skin.
An individual’s personal characteristics and own perception of self also influence the specific
goals selected. Research on personal goal orientation distinguished two types of people:
(1) Persons with promotion focus are interested in their growth and development, have more
hopes and aspirations and favor the presence of positive outcomes.
(2) Persons with a prevention focus are interested in safety and security, are more concerned with
duties and obligations and favor the absence negative outcomes. One study found that, in
forming consumption related goals, consumers with a prevention focus favor the status quo and
inaction over action. Another study distinguished between two types of goals:
1. Ideals, which represent hopes, wishes, and aspirations; and 2. Oughts, which represent duties,
obligations and responsibilities.
The study showed that people concerned with ideals relied more on feelings and affects in
evaluating advertisements, while people more concerned with ought’s relied more heavily on the
substantive and factual contents of ads. In yet another study, some consumers were led to believe
that they obtained a discount in the purchase price of a PC because of their good negotiating
skills and were encouraged to feel proud, while others were led to believe that they received the
discount because the computer was on sale and were not encouraged to feel proud. In addition,
the goals that the consumers were encouraged to believe that they had obtained were stated as
either gains (i.e. promotion goals) or the avoidance of losses (i.e. prevention goals). The study
showed that people who felt proud of their negotiating skills and also believed that they avoided
losses were less likely to repurchase the product than persons who felt proud and also believed
that they had achieved gains. For the people who did not feel proud, the type of goals they
believed they had accomplished had no impact on intentions to repurchase the product.

Motivation theories and Marketing Strategy

Maslow’s Hierarchy of needs
In a hierarchy of motives, the most influential motive is seen as enjoying the most dominant
position and so on through the entire list. The hierarchy of needs proposed by Abraham H.
Maslow is perhaps the best known and is good guide to general behavior. Maslow classified
needs into five groupings, ranking in order of importance from low-level (biogenic) needs to
higher-level (psychogenic) needs and suggested the degree to which each would influence
human behavior. According to this scheme, individuals strive to fulfil lower-level needs first
before higher-level become active. The lowest level unfulfilled need of an individual serves to
motivate her/his behavior. When this need is fairly satisfied, a new higher-order need becomes
active and motivates the individual. If a lower-order need again becomes active due to renewed
deprivation, it may temporarily become more active again.
1. Physiological needs: According to Maslow, the first and most basic level of needs is
physiological. These needs are essential to sustain biological life and include air, water, food,
shelter, clothing, and gender- all the primary or biogenic needs. Physiological needs are very
potent when they are chronically unfulfilled. Example, for a man who is extremely and
dangoursly hungry, no other interest exists but food. He dreams food, he remembers food, he
thinks about food, he emotes only about food, he perceives only food and he wants only food.
2. Safety Needs: After physiological needs, safety and security needs acquire the driving force
and influence an individual’s behavior. These needs are concerned with much more than only the
physical safety and health but also include routine, familiarity, security, certainty and stability,
etc. example, labour union in India provide members security of employment.
3. Social Needs: The third level, social needs include love, affection, acceptance, belonging and
friendship, etc. by and large, humans are social creature and need warm and satisfying human
relationships with others. People have strong attachments with their families and are motivated
by love and affection. Product are often used as symbols of love and caring. Example, flowers,
greeting cards, chocolates, jewelry are given as token of affection for someone. Ads of personal
care products often emphasis appeals based on social acceptance.

4. Ego needs: The fourth level is concerned with ego needs. These needs include reputation,
prestige, status, self-esteem, success and independence, etc. many ads of ego intensive products
emphasize ego such as expensive watches, jewelry and designer dresses etc.
5. Self-actualization need: Maslow believed that most people are unable to satisfy their ego
needs sufficiently and as a result of this are unable to move to the fifth and last level. Self-
actualization refers to a person’s desire to achieve or become what one is capable of. People
express this need in different ways. The only common thing is that they all seem to be striving
for excellence in whatever they are doing. They work single-mindedly for years to achieve what
they want.
McGuire’s Psychological motives
William J. McGuire (‘Some Internal Psychological Factors Influencing Consumer Choice”,
Journal of consumer research, March 1976) presented a more comprehensive list of 16 motive
categories. He first divides motivation into four main categories based on two criteria:
i. Cognitive or affective motivation: It focuses on person’s need for maintaining a coherent and
organized view of the world to achieve a sense of meaning. Affective motives deal with the need
to reduce or avoid any tension and accomplish satisfying feeling states and achieve personal
goals.
ii. Preservation or growth motivation: It focuses on trying to maintain balance, and growth
motives relate to personal development.
These four principal categories are further subdivided on the basis of motivation source and
motivation objective.
iii. Is the behviour proactive or a reaction to something in the environment?
It differentiate between internally aroused motives and motives aroused in response to
circumstances.
iv. Is the behavior helping to attain a new internal state or a new external relationship to the
environment?
It helps distinguish outcomes that are internal to the individual and those concerned with
relationship with the environment.

Cognitive preservation motives

Consistency-Need (active, internal): This needs focuses on maintaining a consistent and
coherent view of oneself and the world. These aspects include beliefs, attitudes, behaviours,
opinions, self-images and view of others, etc. reduction of cognitive dissonance is a common
motive of this category. Because of this need for internal consistency, consumers are often
reluctant to believe information that disagrees with their existing beliefs.
Attribution- Need (active, external): This need focuses on understanding and inferring causes
for various occurrences. Humans have a tendency to attribute causes of success to self-explain
consumers’ need to attribute who or what causes the things that happen. This approach to
explaining the reasons consumers attribute certain meanings to others behavior has been put to
use in the analysis of consumer responses to determining the credibility of messages. Consumers
often view ad messages or salespersons’ advice as having sales motive and tend to discount
these. However, if a friend gives the same favourable message or advice about a product or
service, it is attributed to a desire of being helpful and might be viewed favourably.
Categorization-Need (passive, internal): Consumers have a need to categorize complex
information in order to organize and understand it easily. There is too much information and
almost everyday we are exposed to view experiences, so we have need to establish distinct
categories that facilitate processing large amounts of information. Example, there are different
price ranges for computer notebooks. Some are above Rs. 1,00,000 some others are priced below
Rs. 1,00,000 but above Rs.80,000. These different price ranges carry different meanings because
of information arranged in different price categories.
Objectification-Need (passive, external): Motives of this category focus on observable stimuli
or symbols that helps people to draw conclusions about what they feel and know. We establish
impressions, feelings, and attitudes by observing our own and others behavior to draw inferences
what one feels and thinks. The way people dress often communicates the subtle meaning of a
desired image and the lifestyle.
Cognitive Growth Motives
Autonomy-Need (active, internal): The need for independence and individuality is viewed as
an important characteristic in many cultures around the world. People seek individuality and
personal growth through self-actualization and development of distinct identity. This need is

present among individuals in all cultures, only the degree of intensity varies. In certain western
cultures, the need for individuality is more valued and encouraged compared to some eastern
cultures where affiliation is more socially acceptable and valued. One way of expressing this
need for autonomy is that consumers acquire or possess products that are considered as unique in
some way.
Stimulation-Need (active, external): This need focuses on seeking stimulation through new
events circumstances, or exploration. Consumers indulge into variety seeking just for the sake of
change and brand switching to satisfy this need. It is interesting to note that consumers exposed
to too much change desire stability and those in stable environments seek change to escape
boredom.
Matching-Need (passive, internal): People are motivated to create mental images of ideal
situations according to their perceptions and on an ongoing basis match (compare) their
perceptions of actual situations to these ideals. This leads to changes in their behaviours and
results are compared in terms of progress towards the desired ideal state. Example, consumers
may compare a new car model to their ideal car rather than other brands in the same range.
Utilitarian- Need (passive, external): This type of motivation focuses on the need to make use
of different sources of information in the external environment for one’s advantage. This theory
views the consumer as a problem solver who considers situations as opportunities to gain useful
information and new skills. Consumers view spurces of marketing information as a means of
learning about products, services and lifestyles etc. example, many consumers go aroung doing
‘window shopping’ to learn about prices and new trends in clothing style.
Affective Preservation Motives
Tension-reduction Need (active, internal): People are faced with various situations in their
daily lives when their needs are not fulfilled, causing undesirable stress and tension. People feel
a need to avoid or reduce tension. Example, some person avoid buying new brands.
Self-expression Need (active, external): This need deals with projecting one’s identity to others
so that others know who they are, what type of products they use and make a statement about
their lifestyle. Purchase of different type of products such as clothing and autos allows consumer
to project an identity as these are viewed as possessing symbolic meanings.

Ego Defence-Need (passive, internal): It is another important motive and concerns the need to
protect oneself from social embarrassment and other threats to self-concept. Ex: consumers who
are high self-monitors avoid any chance of making socially incorrect purchase.
Reinforcement-Need (passive, external): People often experience strong motive to behave in
certain manner because that behavior brought rewards in similar situations in the past. This is
what the theory of instrumental conditioning emphasizes. Example, many sales promotions such
as contests and sweepstakes bring tangible rewards for some consumers and excitement to all the
participants.
Affective Growth Motives
Assertion-Need (active, internal): This need leads one to compete, achieve success, power, and
admiration. For those having this motivation dominance, accomplishment and success are
important. Many nutritious products are promoted on this theme (the commercial of Butter Bite
biscuits).
Affiliation-Need (active, external): People seek acceptance, affection and warm personal
relationships with others. Group membership is important to most people in their lives and to
fulfil this need they observe group norms including purchase decisions. Many commercials of
soft drinks focus on this motive.
Identification-Need (passive, internal): This motive drives people to adopt new identities and
roles to increase one’s self-concept. People gain pleasure from adding satisfying roles and by
enhancing the importance of already adopted roles. Many ads focus on encouraging a good host
image by using certain brands.
Modelling-Need (passive, external): Modelling is major learning method by which children
learn to become consumers. Children imitate the behavior of elders and learning takes place. It
also explains the tendency of group members to adopt certain behaviours approved by group
members. Many ads use endorsers that are believed to be role models using certain brands to
convince conformists.
Personality
Meaning
The inner psychological characteristics that both determine and reflect how a person responds to
his or her environment

Nature of personality

Personality reflects individual differences

Personality is consistent and enduring

Personality can change
Theories of personality and marketing strategy

1. Freudian theory
Sigmund Freud’s psychoanalytic theory of personality is a cornerstone of modern psychology.
This theory was built on the premise that unconscious needs or drives, especially sexual and
other biological drives, are at the heart of human motivation and personality.

Id, Superego, and Ego
1. The Id is the “warehouse” of primitive and impulsive drives, such as: thirst, hunger, and sex,
for which the individual seeks immediate satisfaction without concern for the specific means
of that satisfaction.
2. Superego is the individual’s internal expression of society’s moral and ethical codes of
conduct.
a) The superego’s role is to see that the individual satisfies needs in a socially acceptable
fashion.
b) The superego is a kind of “brake” that restrains or inhibits the impulsive forces of the id.
3. Ego is the individual’s conscious control which functions as an internal monitor that attempts
to balance the impulsive demands of the id and the sociocultural constraints of the superego.
4. Freud emphasized that an individual’s personality is formed as he or she passes through a
number of distinct stages of infant and childhood development.
5. These distinct stages of infant and childhood development are: oral, anal, phallic, latent, and
genital stages.
6. An adult’s personality is determined by how well he or she deals with the crises that are
experienced while passing through each of these stages.

Freudian Theory and Product Personality

Sigmund Freud, the father of psychology, became famous with its psychoanalytic theory of
personality. In fact the theory is regarded as the cornerstone of modern psychology. Sigmund
based his theory on certain assumptions:
- Unconscious needs or drives lie at the heart of human motivation and personality.
- The socialization process that takes place within people in a social set up has a huge impact
on individual behavior.
Freud explained much of how the psyche or the mind operates, and proposed that the human
psyche is composed of parts within our awareness and beyond our awareness. He said that all
behavior within an individual cannot be explained, much lies in the sub-conscious.
Freud viewed personality as “an iceberg”; just as majority of the iceberg remains within
water and only the tip of the iceberg is above water, similarly, much of our personality exists
below our level of awareness, as the unconscious and just as a part of it lies above, as the
conscious. Even though an individual is not aware of the contents and processes of the
unconscious, much of our behavior is attributed to it.
Based on the level of awareness, the human mind comprises three parts, viz., conscious,
preconscious and the unconscious or the sub-conscious; The conscious mind is what one is
aware of at any particular moment of time and reflects ones present thoughts, feelings,
perceptions, fantasies, etc; it restricts itself to the current thinking processes and comprises a
very large part of our current awareness. The preconscious mind or the "available memory,"
is what can be retrieved and made conscious, and brought to mind instantly or quickly; it is
what we are aware of but not paying attention to at a point of time; it is something that can be
brought into the conscious mind. The larger part of the human mind consists of the

unconscious, which is all that stays at the subconscious level, and comprises the unaware,
better known as our drives or instincts, feelings and memories and emotions related to
trauma; this part in content and process is out of direct reach of the conscious mind, and
thinks independently; an individual has no access to because it is unknown and hidden.
This unconscious part is the source of all our drives and motives; yet we are often deny or
refuse to accept and often resist them from becoming conscious.
Neo-Freudian Personality Theory
1. Several of Freud’s colleagues disagreed with his contention that personality is primarily
instinctual and sexual in nature.
a) They argued that social relations are fundamental to personality development.
2. Alfred Adler viewed human beings as seeking to attain various rational goals, which he
called style of life, placing emphasis on the individual’s efforts to overcome feelings of
inferiority.
3. Harry Stack Sullivan stressed that people continuously attempt to establish significant and
rewarding relationships with others, placing emphasis on efforts to reduce tensions.
4. Karen Horney focused on the impact of child-parent relationships, especially the individual’s
desire to conquer feelings of anxiety. She proposed three personality groups: compliant,
aggressive, and detached.
a) Compliant individuals are those who move toward others—they desire to be loved,
wanted, and appreciated.
b) Aggressive individuals move against others—they desire to excel and win admiration.
c) Detached individuals move away from others—they desire independence, self-
sufficiency, and freedom from obligations.
5. A personality test based on the above (the CAD) has been developed and tested.
a) It reveals a number of tentative relationships between scores and product and brand
usage patterns.
6. It is likely that many marketers have used some of these neo-Freudian theories intuitively.
Trait Theory
1. Trait theory is a significant departure from the earlier qualitative measures that are typical of
Freudian and neo-Freudian theory.

2. It is primarily quantitative or empirical, focusing on the measurement of personality in terms

of specific psychological characteristics called traits.
a) A trait is defined as any distinguishing, relatively enduring way in which one individual
differs from another.
3. Selected single-trait personality tests increasingly are being developed specifically for use in
consumer behavior studies. Types of traits measured include:
a) Consumer innovativeness—how receptive a person is to new experiences.
b) Consumer materialism—the degree of the consumer’s attachment to “worldly
possessions.”
c) Consumer ethnocentrism—the consumer’s likelihood to accept or reject foreign-made
products.
4. Researchers have learned to expect personality to be linked to how consumers make their
choices, and to the purchase or consumption of a broad product category rather than a
specific brand.
Applications of personality concepts in marketing
Personality and understanding consumer diversity
Marketers are interested in understanding how personality influences consumption behavior
because such knowledge enables them to better understand consumers and to segment and target
those consumers who are likely to respond positively to their product or service communications.
Several specific personality traits that provide insights about consumer behavior are examined
next.
Consumer Innovativeness and Related Personality Traits
1. Marketing practitioners must learn all they can about consumer innovators—those who are
likely to try new products. Those innovators are often crucial to the success of new products.
2. Personality traits have proved useful in differentiating between consumer innovators and
non-innovators.
3. Personality traits to be discussed include:
a) Consumer innovativeness.
b) Dogmatism.
c) Social character.

d) Need for uniqueness.

e) Optimum stimulation level.
f)Variety-novelty seeking.
Consumer Innovativeness
1. How receptive are consumers to new products, new services, or new practices?
2. Recent consumer research indicates a positive relationship between innovative use of the
Internet and buying online.
Dogmatism
1. Dogmatism is a personality trait that measures the degree of rigidity an individual displays
toward the unfamiliar and toward information that is contrary to their established beliefs.
a) Consumers low in dogmatism are more likely to prefer innovative products to
established ones.
b) Consumers high in dogmatism are more accepting of authority-based ads for new
products.
Social Character
1. Social character is a personality trait that ranges on a continuum from inner-directed to other-
directed.
a) Inner-directed consumers tend to rely on their own “inner” values or standards in
evaluating new products and are innovators. They also prefer ads stressing product
features and personal benefits.
b) Other-directed consumers tend to look to others for direction and are not innovators.
They prefer ads that feature social environment and social acceptance.
Need for Uniqueness
1. We all know people who seek to be unique.
2. These people avoid conformity.
Optimum Stimulation Level
1. Some people prefer a simple, uncluttered, and calm existence, although others seem to prefer
an environment crammed with novel, complex, and unusual experiences.

2. Persons with optimum stimulation levels (OSLs) are willing to take risks, to try new
products, to be innovative, to seek purchase-related information, and to accept new retail
facilities.
3. The correspondence between an individual’s OSL and their actual circumstances has a direct
relationship to the amount of stimulation individual’s desire.
a) If the two are equivalent, they tend to be satisfied.
b) If bored, they are understimulated, and vice versa.
Variety-Novelty Seeking
1. This is similar to OSL.
a) Primary types are variety or novelty seeking.
2. There appear to be many different types of variety seeking: exploratory purchase behavior
(e.g., switching brands to experience new and possibly better alternatives), vicarious
exploration (e.g., where the consumer secures information about a new or different
alternative and then contemplates or even daydreams about the option), and use
innovativeness (e.g., where the consumer uses an already adopted product in a new or novel
way).
a) The third form of variety or novelty seeking—use innovativeness—is particularly
relevant to technological.
3. Consumers with high variety seeking scores might also be attracted to brands that claim to
have novel or multiple uses or applications.
4. Marketers, up to a point, benefit from thinking in terms of offering additional options to
consumers seeking more product variety.
a) Ultimately, marketers must walk the fine line between offering consumers too little and
too much choice.
5. The stream of research examined here indicates that the consumer innovator differs from the
non-innovator in terms of personality orientation.
Cognitive Personality Factors
1. Market researchers want to understand how cognitive personality influences consumer
behavior.

2. Two cognitive personality traits have been useful in understanding selected aspects of
consumer behavior. They are:
a) Need for cognition.
b) Visualizers versus verbalizers.
Need for Cognition
1. This is the measurement of a person’s craving for or enjoyment of thinking.
2. Consumers who are high in NC (need for cognition) are more likely to be responsive to the
part of an advertisement that is rich in product-related information of description.
a) They are also more responsive to cool colors.
3. Consumers who are relatively low in NC are more likely to be attracted to the background or
peripheral aspects of an ad.
a) They spend more time on print content and have much stronger brand recall.
4. Need for cognition seems to play a role in an individual’s use of the Internet.
Visualizers versus Verbalizers
1. Visualizers are consumers who prefer visual information and products that stress the visual.
2. Verbalizers are consumers who prefer written or verbal information and products that stress
the verbal.
3. This distinction helps marketers know whether to stress visual or written elements in their
ads.
Consumer materialism:
Consumer materialism refers to the importance that a consumer places on the acquisition and
possession of material objects. In the consumer-behavior literature, materialism is usually
considered to be a personal value, meaning that it affects the priorities in people's lives and the
choices they make.
1. Materialism is a trait of people who feel their possessions are essential to their identity.
2. They value acquiring and showing off possessions, they are self-centered and selfish, they
seek lifestyles full of possessions, and their possessions do not give them greater happiness.
Consumer Ethnocentrism: (Responses to Foreign-Made Products)

Ethnocentrism is illustrative of a persons’ feeling of patriotism, and a resultant desire to
accept or reject foreign made products and/or brands. As consumers, they feel that it is

undesirable and inappropriate to prefer foreign products over indigenous ones; this could
be one, because of patriotism, and two, because of the impact that it would have on the
socio-cultural fabric and the economy.

To identify consumer segments receptive to foreign-made products, researchers have
developed and tested the consumer ethnocentrism scale—CETSCALE.
o CETSCALE results identify consumers with a predisposition to reject or accept
foreign-made products.

Consumers who are highly ethnocentric feel that it is wrong to purchase foreign-made
products because it would hurt the domestic economy.
o Non-ethnocentric consumers tend to evaluate foreign-made products more
objectively.

Marketers can appeal to ethnocentric consumers by stressing nationalistic themes in their
promotional efforts.
BRAND PERSONALITY
1. It appears that consumers tend to ascribe various descriptive “personality-like” traits or
characteristics—the ingredients of brand personalities—to different brands in a wide variety
of product categories.
2. A brand’s personality can either be functional (“provides safety”) or symbolic (“the athlete in
all of us”).
Brand Personification
1. A brand personification recasts consumers’ perception of the attributes of a product or
service into the form of a “human-like character.”
2. It seems that consumers can express their inner feelings about products or brands in terms of
association with a known personality.
3. Identifying consumers’ current brand-personality link or creating one for new products are
important marketing tasks.
4. There are five defining dimensions of a brand’s personality (“sincerity,” “excitement,”
“competence,” “sophistication,” and “ruggedness”), and fifteen facets of personality that
flow out of the five dimensions (e.g., “down-to-earth,” “daring,” “reliable,” “upper class,”
and “outdoors”).

Gender and Product Personality

1. A product personality or persona, frequently means that the product or brand has a “gender.”
2. This assigning of a gender as part of personality description is fully consistent with the
marketplace reality that products and services, in general, are viewed by consumers as having
a “gender-being.”
3. Armed with such knowledge of the perceived gender of a product or a specific brand,
marketers are in a better position to select visual and copy-text for various marketing
messages.
Geography and Product Personality
1. Marketers learned along time ago that certain products, in the minds of consumers, possess a
strong geographical association.
2. Using the geographical association can create a geographic equity.
3. The real question is, “Does location (geography) add to the brand image and to the product’s
brand equity?”
Color and Personality
1. Consumers also tend to associate personality factors with specific colors.
a) In some cases, various products, even brands, associate a specific color with
personality-like connotations.
b) It appears that blue appeals particularly to female consumers.
c) Yellow is associated with “novelty,” and black frequently connotes “sophistication.”
d) For this reason, brands wishing to create a sophisticated persona (e.g., Minute Maid
juices or Pasta LaBella) or an upscale or premium image (e.g., Miller Beers’ Miller
Reserve) use labeling or packaging that is primarily black.
2. Many fast-food restaurants use combinations of bright colors, like red, yellow, and blue, for
their roadside signs and interior designs.
a) These colors have come to be associated with fast service and food being inexpensive.
3. In contrast, fine dining restaurants tend to use sophisticated colors like gray, white, shades of
tan, or other soft, pale, or muted colors to reflect fine leisurely service.
4. Consumers’ like or dislike for various colors can differ between countries.

SELF AND SELF-IMAGE

1. Self-images, or “perceptions of self,” are very closely associated with personality in that
individuals tend to buy products and services and patronize retailers with images or
“personalities” that closely correspond to their own self-images.
2. Such concepts as one or multiple selves, self-image, and the notion of the extended self is
explored by consumer behavior researchers.
One or Multiple Selves
1. Historically, individuals were thought to have a single self-image and focused on products
accordingly.
a) Research indicates a consumer is quite likely to be or act differently with different
people and in different situations.
2. The idea that an individual embodies a number of different multiple selves suggest that
marketers should target their products and services to consumers within the context of a
particular self.
3. The healthy or normal person is likely to display a somewhat different personality in various
situations or social roles.
The Extended Self
1. Consumers’ possessions can be seen to “confirm” or “extend” their self-images.
2. The above suggests that much of human emotion can be connected to valued possessions.
3. Possessions can extend the self in a number of ways:
a) Actually, by allowing the person to do things that otherwise would be very difficult or
impossible to accomplish (e.g., problem-solving by using a computer).
b) Symbolically, by making the person feel better or “bigger” (e.g., receiving an employee
award for excellence).
c) By conferring status or rank (e.g., status among collectors of rare works of art because
of the ownership of a particular masterpiece).
d) By bestowing feelings of immortality, by leaving valued possessions to young family
members (this also has the potential of extending the recipients’ “selves”).
e) By endowing with magical powers (e.g., a cameo pin inherited from one’s aunt might be
perceived as a magic amulet bestowing good luck when it is worn).

Altering the Self

1. Consumers often wish to change themselves—to become a different or improved self.
2. It seems consumers are trying to express their individualism or uniqueness by creating and
maintaining a new self.
3. Clothing, cosmetics, jewelry, grooming aids, and all kinds of accessories offer consumers the
opportunity to modify their appearance and thereby to alter their selves.
4. Personal vanity and self-image are closely related.
Perception
Perception is the process by which individuals select, organize, and interpret stimuli into a
meaningful and coherent picture of the world. Perception has strategy implications for marketers
because consumers make decisions based on what they perceive rather than on the basis of
objective reality.
Consumer perception and Marketing implications
Consumer perception has implications for a marketer. Marketer should understand that people
perceive things differently because of the perceptual mechanism that differs between people.
Every person is unique in himself with unique backgrounds, experiences, expectations, etc, and
so the resultant perceptions are also unique.
I Perceptual selectivity:
 The marketer should manage the sensory and perceptual factors to influence consumers.
 Human beings are simultaneously exposed to various stimuli in his/her environment. The
choice of the stimuli that they select would depend on what they feel is relevant for them
and or appropriate for them. In the field of marketing, stimuli could include the product,
the brand name, the features and attributes, the packaging, the advertisement, etc.
 The marketer should give attention to factors external and related to the stimuli, as well as
to factors, internal and related to the perceiver. External stimuli could take the form of
size, intensity, contrast, motion, repetition, familiarity, novelty etc. The stimuli should
possess one or more of such characteristics to get selected. Internal stimuli refer to factors
that are related to an individual viz., factors like motivation, learning, personality and
self-image, etc. Perceptual selectivity of a person would depend upon what he considers
relevant and appropriate as per these psychological variables.

 Keeping perceptual selectivity in mind, marketers, should offer different products for
different segments and position them accordingly.
 In order to get noticed, the marketer should understand that the absolute threshold for a
stimulus should be kept high; for example, when making decisions on packaging of
potato wafers, the font size should be big, the colors flashy and attractive etc.
II Perceptual Organization:
 Similar to perceptual selectivity, during perceptual organization, the marketer should give
attention to factors external and related to the stimuli, as well as to factors, internal and
related to the perceiver. The external factors refer to the external and observable
characteristics of the stimulus, i.e. of the person, object, thing or situation; in marketing
terms it refers to the characteristics of the product, brand, packaging, advertisement etc.
Such factors would include size, intensity, motion, repetition, familiarity and novelty,
color and contrast, position, and isolation. The individual factors refer to factors internal
to and related to the perceiver; in marketing terms it refers to the characteristics of the
consumer. For example, motivation, learning, personality and self-image etc. The
marketer should aim at making the principles of the Gestalt philosophy work in the
product's favor.
Perceptual Interpretation:
Similar to selection and organization, perceptual interpretation is also influenced by the forces
external and related to the stimuli, as well as forces internal and related to the perceiver. It is also
affected by the situation under which perception takes place.
Product and service offering and Imagery:
- While making purchase decisions, consumers are faced with numerous alternatives, and
purchase decisions is often made on the basis of the image that the product/service offering or
the brand holds.
Perceived price and Imagery:
-The manner in which a marketer prices a product and creates an image also has an impact on
consumer decision making. Marketers must identify appropriate reference prices (from a

consumer’s perspective), and estimate those levels (higher/lower) that are regarded as
uncomfortable and unacceptable by consumers. They must price their offerings accordingly.
Perceived quality and Imagery:
- Marketers must communicate product or service features in a manner that develops perceptions
of product or service quality. Consumers judge the quality of the product offering on the basis of
internal and external cues; internal cues refer to the physical characteristics internal to the
product or service, like size, color, etc. while extrinsic cues refer to cues that are external to the
product or service, like price of the product, brand image, retail store image, or the country of
origin.
Price/Quality Relationship and Imagery:
-Consumers relate price with quality and price is seen as an indicator of quality. Consumers also
relate the increased price to the product/service attributes, features and the overall benefits that
the offering provides. However, when a consumer has prior experience with the brand or is
familiar with the brand name and the brand image, price would become a less important factor in
the assessment of quality.
Retail Store and Image:
Just as product and service offerings are positioned and clearly indicate the segment(s) for which
they are aimed, similarly retail stores are also positioned. Not only are they indicative of the
products/service offerings that they sell, but the layout, design, ambience and the price of the
offerings clearly demonstrate the segment(s), for whom they exist. Consumers tend to shop in
stores that have images consistent with their own self-images. Thus retail stores create images for
their self, which illustrate the kind of and the quality of products they stock and carry.
Manufacturer name and Image:
Consumers are more receptive to product and service offerings that emanate from a respectable,
credible and reputed manufacturer, rather than one who is less favorable, or neutral, or totally
unknown.
Brand Image:
Consumers tend to form images of a brand; brand image is defined as the manner in
which a consumer forms perception about a brand. Marketers should aim at creating and

maintaining a positive image about their brands. Such an image gets created by product features,
attributes, quality as well as the satisfaction.
Perceived risk:
The purchase process results in a state of anxiety and tension with respect to the negative
consequences that could result from product usage. This state known as “perceived risk”; it refers
to a feeling of uncertainty that arises within an individual when he fails to predict the
consequences of product choice, usage and resultant experience.
Elements of perception
Sensation
1. Sensation is the immediate and direct response of the sensory organs to stimuli (an
advertisement, a package, and a brand name).
2. A stimulus is any unit of input to any of the senses.
3. Sensory receptors are the human organs (i.e., the eyes, ears, nose, mouth, and skin) that
receive sensory inputs, sight, sound, smell, taste, or touch.
4. Human sensitivity refers to the experience of sensation.
a) Sensitivity to stimuli varies with the quality of an individual’s sensory receptors and the
amount or intensity of the stimuli to which he/she is exposed.
b) Sensation itself depends on energy change, the difference of input.
c) Thus, a constant environment, whether very busy and noisy or relatively quiet, would
provide little sensation because of the lack of change, the consistent level of stimulation.
5. As sensory input decreases, the ability to detect changes increases.

a) This ability of the human organism to accommodate itself to varying levels of
sensitivity as external conditions vary not only protects us from damaging, disruptive,
or irrelevant bombardment when the input level is high but has important implications
for marketers.
The Absolute Threshold
1. The lowest level at which an individual can experience a sensation is called the absolute
threshold.

a) The point at which a person can detect the difference between “something” and
“nothing” is that person’s absolute threshold for the stimulus.
b) For example, the distance at which a driver can note a specific billboard on a highway is
that individual’s absolute threshold.
c) Under conditions of constant stimulation, such as driving through a “corridor” of
billboards, the absolute threshold increases (that is, the senses tend to become
increasingly dulled).
2. Adaptation refers specifically to “getting used to” certain sensations, becoming accustomed
to a certain level of stimulation.
a) Sensory adaptation is a problem that causes many advertisers to change their
advertising campaigns regularly.
3. Marketers try to increase sensory input in order to cut through the daily clutter consumers
experience in the consumption of advertising.
a) Some increase sensory input in an effort to cut through the advertising “clutter.”
4. Other advertisers try to attract attention by decreasing sensory input.
a) Some advertisers uses silence (the absence of music or other audio effects) to generate
attention.
b) Some marketers seek unusual media in which to place their advertisements in an effort
to gain attention.
c) Some use scent researchers to enhance their products with a unique smell.
5. Package designers try to determine consumers’ absolute thresholds to make sure that their
new product designs will stand out from competitors’ packages on retailers’ shelves.
The Differential Threshold
1. The minimal difference that can be detected between two stimuli is called the difference
threshold or the j.n.d. (just noticeable difference).
2. A 19th century German scientist named Ernst Weber discovered that the j.n.d. between two
stimuli was not an absolute amount, but an amount relative to the intensity of the first
stimulus.
3. Weber’s law states that the stronger the initial stimulus, the greater the additional intensity
needed for the second stimulus to be perceived as different.

a) Also, an additional level of stimulus, equivalent to the j.n.d., must be added for the
majority of people to perceive a difference between the resulting stimulus and the initial
stimulus.
b) Weber’s law holds for all senses and almost all levels of intensity.
c) Retailers use the principle in reducing prices.
d) Markdowns must amount to at least twenty percent to be noticed by shoppers.
Subliminal Perception
1. People are also stimulated below their level of conscious awareness—they can perceive
stimuli without being consciously aware of it.
2. The threshold for conscious awareness appears to be higher than the absolute threshold for
effective perception.
3. Stimuli below the “lumen” of conscious awareness, too weak or brief to be consciously seen
or heard, may be strong enough to be perceived by one or more receptor cells.
a) This is subliminal perception.
4. In the late 1950s there was a stir when consumers were being exposed to subliminal
advertising messages they were not aware of receiving.
a) Messages were supposedly persuading people to buy goods and services without their
being aware of it.
b) The effectiveness of the concept was tested at a drive-in theater by flashing the words
“eat popcorn” and “drink coke” on the screen during the movie, so quickly that the
audience was not aware of it.
c) In a six-week test, popcorn sales increased 58 percent and coke sales 18 percent.
d) No scientific controls were used, and results were never replicated.
DYNAMICS OF PERCEPTION
1. Human beings are constantly bombarded with stimuli during every minute and every hour of
every day.
2. Perception is not a function of sensory input alone, rather, perception is the result of two
different kinds of inputs that interact to form the personal pictures—the perceptions—that
each individual experiences.

a) Physical stimuli from the outside environment, and internal stimuli based on
expectations, motives, and learning are based on previous experiences.
3. Because each person is a unique individual, with unique experiences, needs, wants, desires,
and expectations, it follows that each individual’s perceptions are also unique.
4. There are three aspects to perception—selection, organization, and interpretation of stimuli.
a) Individuals are very selective as to which stimuli they “recognize.”
b) They subconsciously organize the stimuli they do recognize according to widely held
psychological principles.
c) And they interpret such stimuli (i.e., they give meaning to them) subjectively in
accordance with their needs, expectations, and experiences.
Perceptual Selection
1. Consumers subconsciously exercise selectivity as to the stimuli they perceive.
2. Which stimuli get selected depends on two major factors in addition to the nature of the
stimulus itself:
a) Consumers’ previous experience as it affects their expectations.
b) Their motives at the time (their needs, desires, interests, and so on).
3. Each of these factors can serve to increase or decrease the probability that a stimulus will be
perceived.
The Nature of the Stimulus
1. Marketing stimulus contains an enormous number of variables. Examples include:
a) Nature of the product.
b) Its physical attributes.
c) The package design.
d) The brand name.
e) The advertisements and commercials.
f) The position of a print ad or commercial.
g) The editorial environment.
2. Contrast is one of the most attention-compelling attributes of a stimulus.
a) Advertisers use extreme attention-getting devices to get maximum contrast and
penetrate the consumer’s perceptual screen.

b) Advertisers use color contrasts, size, etc., to create stopping power and gain attention.
3. Packaging is also differentiated sufficiently to ensure rapid consumer perception.
4. Sometimes advertisers capitalize on the lack of contrast.
5. A technique that has been used effectively in TV commercials is to position the commercial
so close to the storyline of a program that viewers are unaware they are watching an ad until
they are well into it.
a) The Federal Trade Commission has strictly limited the use of this technique in
children’s programming.
6. Advertisers are also running print ads (called advertorials) that closely resemble editorial
material, making it increasingly difficult for readers to tell them apart.
7. Advertisers are producing 30-minute commercials (called infomercials) that appear to the
average viewer as documentaries.
Expectations
1 People see what they expect to see.
2 What they expect to see is usually based on familiarity, previous experience, or
preconditioned set expectations.
3 Stimuli that conflict sharply with expectations often receive more attention than those that
conform to expectations.
4 For years, certain advertisers have used blatant sexuality in advertisements for products to
which sex was not relevant in the belief that such advertisements would attract a high degree
of attention.
5 Ads with irrelevant sexuality often defeat the marketer’s objectives, because readers tend to
remember the sexual aspects of the ad, not the product or brand advertised.
Motives
1. People tend to perceive things they need or want.
a) The stronger the need, the greater the tendency to ignore unrelated stimuli in the
environment.
2. An individual’s perceptual process attunes itself more closely to those elements of the
environment that are important to that person.

3. Marketing managers recognize the efficiency of targeting their products to the perceived
needs of consumers.
Selective Perception
1. The consumer’s “selection” of stimuli (selective perception) from the environment is based
on the interaction of expectations and motives with the stimulus itself.
2. Selective exposure—consumers actively seek out messages they find pleasant or with which
they are sympathetic.
a) Consumers actively avoid painful or threatening messages.
3. Selective attention—consumers have a heightened awareness of the stimuli that meet their
needs or interests.
a) Consumers have a lower awareness of stimuli irrelevant to their needs.
b) People vary in terms of the kind of information in which they are interested and the
form of message and type of medium they prefer.
4. Perceptual defense—threatening or otherwise damaging stimuli are less likely to be
perceived than are neutral stimuli. Individuals unconsciously may distort information that is
not consistent with their needs, values, and beliefs.
5. Perceptual blocking—consumers screen out enormous amounts of advertising by simply
“tuning out.”
Perceptual Organization
1. People do not experience the numerous stimuli they select from the environment as separate
and discrete sensations.
a) People tend to organize stimuli into groups and perceive them as unified wholes.
2. Gestalt psychology (Gestalt, in German, means pattern or configuration) is the name of the
school of psychology that first developed the basic principles of perceptual organization.
3. Three of the most basic principles of perceptual organization are figure and ground,
grouping, and closure.
Figure and Ground
1. Stimuli that contrast with their environment are more likely to be noticed.
2. The simplest example is the contrast between a figure and the ground on which it is placed.
a) The figure is usually perceived clearly.

b) The ground is usually perceived as indefinite, hazy, and continuous.

3. The figure is more clearly perceived because it appears to be dominant—the ground appears
to be subordinate and less important.
4. Advertisers have to plan their advertisements carefully to make sure that the stimulus they
want noted is seen as figure and not as ground.
5. Marketers sometimes run advertisements that confuse the consumer because there is no clear
indication of which is figure and which is ground.
Grouping
1. Individuals tend to group stimuli in “chunks” rather than as discrete bits of information.
2. Grouping can be used advantageously by marketers to imply certain desired meanings in
connection with their products.
a) Most of us remember things like a social security number because it can be broken into
three “chunks.”
Closure
1. Individuals have a need for closure.
a) As a result, people organize a perception so they see a complete picture.
b) If the pattern of stimuli to which they are exposed is incomplete, they tend to perceive it
as complete—they fill in the missing pieces.
2. The very act of completion serves to involve the consumer more deeply in the message.
Perceptual Interpretation
1. The interpretation of stimuli is uniquely individual because it is based on what individuals
expect to see in light of their previous experience.
2. Stimuli are often highly ambiguous.
a) When stimuli are highly ambiguous, individuals usually interpret them in such a way
that they serve to fulfill personal needs, wishes, and interests.
3. How close a person’s interpretations are to reality depends on the clarity of the stimulus, the
past experiences of the perceiver, and his or her motives and interests at the time of
perception.

Perceptual Distortion
1. With respect to perceptual distortion, individuals are subject to a number of influences that
tend to distort their perceptions.
2. Physical Appearances—people tend to attribute the qualities they associate with certain
people to others who may resemble them.
a) Attractive models are more persuasive and have a more positive influence on consumer
attitudes and behavior than do average-looking models.
3. Stereotypes—individuals tend to carry “pictures” in their minds of the meaning of various
kinds of stimuli.
4. First Impressions—these tend to be lasting but formed while the perceiver does not know
which stimuli are relevant, important, or predictive.
5. Jumping to Conclusions—many people tend to jump to conclusions before examining all the
relevant evidence—hearing the beginning of an ad and drawing the incorrect conclusion.
6. Halo Effect—describes situations where the evaluation of a single object or person on a
multitude of dimensions is based on the evaluation of just one or a few dimensions.
a) Consumers often evaluate an entire product line on the basis of the one product within
the product line.
b) Licensing also is based on the halo effect—associating products with a well-known
celebrity or designer name.
Perceived Price
1. How a consumer perceives a price (perceived price)—as high, as low, as fair—has a strong
influence on both purchase intentions and purchase satisfaction.
2. Perception of price fairness—customers pay attention to the prices paid by other customers
(e.g., senior citizens, frequent fliers, affinity club members).
a) Customers perceive differential pricing strategies used by some marketers as unfair to
those not eligible for the special prices.
b) Perceptions of price unfairness affect consumers’ perceptions of product value, and
ultimately, their willingness to patronize a store or a service.

Reference Prices
1. A reference price is any price that a consumer uses as a basis for comparison in judging
another price.
2. Reference prices can be external or internal.
3. An advertiser generally uses a higher external reference price (“sold elsewhere at...”) in an ad
in which a lower sales price is being offered, to persuade the consumer that the product
advertised is a really good buy.
4. Internal reference prices are those prices (or price ranges) retrieved by the consumer from
memory.
a) Internal reference points are thought to play a major role in consumers’ evaluations and
perceptions of value of an advertised (i.e., external) price deal, as well as in the
believability of any advertised reference price.
5. Acquisition-transaction utility theory—acquisition utility represents the perceived economic
gain or loss associated with a purchase, and is a function of product utility and purchase
price.
a) Transaction utility concerns the perceived pleasure or displeasure associated with the
financial aspect of the purchase and is determined by the difference between the internal
reference price and the purchase price.
6. Several studies have investigated the effects on consumer price perceptions of three types of
advertised reference prices: plausible low, plausible high, and implausible high.
a) Plausible low prices are well within the range of acceptable market prices.
b) Plausible high is near the outer limits of the range but not beyond the realm of
believability.
c) Implausible high is well above the consumer’s perceived range of acceptable market
prices.
7. As long as an advertised reference price is within a given consumer’s acceptable price range,
it is considered plausible and is assimilated.
a) If the advertised reference point is outside the range of acceptable prices (i.e.,
implausible), it will be contrasted and thus will not be perceived as a valid reference
point.

Tensile and Objective Price Claims

1. The semantic cues (i.e., specific wording) of the phrase used to communicate the price-
related information may affect consumers’ price perceptions.
2. Acquisition-transaction utility (e.g., “save 10 to 40 percent,” “save up to 60 percent,” “save
20 percent or more”) are used to promote a range of price discounts for a product line, an
entire department, or sometimes an entire store.
3. Objective price claims provide a single discount level (e.g., “save 25 percent”).
4. Tensile and objective price claims have a potentially greater effect on consumer shopping and
on store traffic than a reference price advertisement that promotes a single product because of
the broader range of merchandise covered by them.
a) Consumer evaluations and shopping intentions are least favorable for advertisements
stating the minimum discount level (“save 10 percent or more”).
b) Ads that state a maximum discount level (“save up to 40 percent”) either equal or
exceed the effectiveness of ads stating a discount range (“save 10 to 40 percent”).
5. Consumer reactions to tensile price claims are affected by the width of the discount range.
a) Studies found that, for broader discount ranges, tensile claims stating the maximum
level of savings have more positive effects than those stating the minimum level or the
entire savings range.
b) For more narrow discount ranges, tensile claims stating the maximum level of savings
appear to be no more effective than claims stating the minimum level or the entire
savings ranges.
6. Consumers are less sensitive to price when using credit cards than when they use cash.
a) In a similar vein, a recent study reported that consumers tend to be less sensitive to price
when they shop online rather than when they shop in stores.
Perceived Quality
1. Consumers often judge the quality of a product (perceived quality) on the basis of a variety
of informational cues.
a) Intrinsic cues are physical characteristics of the product itself, such as size, color,
flavor, or aroma.

b) Extrinsic cues are such things as price, store image, service environment, brand image,
and promotional message.
Perceived Quality of Products
1. Intrinsic cues are concerned with physical characteristics of the product itself, size, color,
flavor, etc.
a) Consumers like to think they base quality evaluations on intrinsic cues, but in reality,
they are often unable to identify that product in a taste test.
b) In the absence of actual experience with a product, consumers often evaluate quality on
the basis of extrinsic cues, price, brand image, store image, etc.
2. Many consumers use country-of-origin stereotypes to evaluate products.
Perceived Quality of Services
1. It is more difficult for consumers to evaluate the quality of services than the quality of
products.
2. Service characteristics include—intangibility, variability, perishability, simultaneously
produced, and consumed.
3. Consumers are unable to compare services side-by-side as they do products, so consumers
rely on surrogate or extrinsic cues when purchasing services.
4. Marketers try to standardize their services in order to provide consistency of quality.
5. Service is consumed as it is being produced.
a) As a result, defective services are difficult to correct.
6. Researchers have concluded that the service quality that a customer perceives is a function of
the magnitude and direction of the gap between expected service and the customer’s
assessment of the service actually delivered.
7. SERVQUAL, measures the gap between customers’ expectations of services and their
perceptions of the actual service.
a) These perceptions are based on the dimensions of; tangibles, reliability, responsiveness,
assurance, and empathy.
b) Two dimensions used to measure service quality are outcome dimensions—the reliable
delivery of the core service—and process dimensions—how the core service is
delivered.

8. Transaction satisfaction index is one tool researchers have used to try to integrate the
concepts of product quality and service quality.
9. Conceptual Model of Transaction Satisfaction—the model suggests that the consumer’s
overall satisfaction with the transaction is based on evaluation of service quality, product
quality, and price.
Price/Quality Relationship
1. Perceived product value has been described as a trade-off between the product’s perceived
benefits (or quality) and perceived sacrifice required to acquire it.
2. A number of research studies support the view that consumers rely on price as an indicator of
product quality.
a) Other studies suggest consumers are actually relying on a well-known brand name as a
quality indicator.
3. Because price is so often considered to be an indicator of quality, some products deliberately
emphasize a high price to underscore their claims of quality.
4. Marketers have used the price/quality relationship to position their products as the top-
quality offering in their product category.
a) There is a positive price/quality relationship.
b) Consumers use price as a surrogate indicator of quality if they have little information or
little confidence in their ability to make a choice.
Perceived Risk
1. Perceived risk is the uncertainty that consumers face when they cannot foresee the
consequences of their purchase decision.
2. The degree of risk that consumers perceive and their own tolerance for risk taking are factors
that influence their purchase strategies.
3. Consumers are influenced by risks that they perceive, whether or not such risks actually
exist.
a) Risk that is not perceived will not influence consumer behavior.
4. Types of risk include: functional risk, physical risk, financial risk, social risk, psychological
risk, and time risk.

Perception of Risk Varies

1. The amount of risk perceived depends on the specific consumer.
2. High-risk perceivers are narrow categorizers because they limit their choices.
3. Low-risk perceivers are broad categorizers because they make their choice from a wide
range of alternatives.
4. Individual perception of risk varies by product category.
a) Consumers are likely to perceive a higher degree of risk in the purchase of a high
definition television set (e.g., functional risk, financial risk, time risk) than in the
purchase of an automobile.
5. Researchers have identified product-specific perceived risk.
a) One study found that consumers perceive service decisions to be riskier than product
decisions, particularly in terms of social risk, physical risk, and psychological risks.
6. Perception of the degree of risk is also affected by the shopping situation.
Types of perceived risk
Functional risk: it is the risk that the product will not perform as expected. (“Can the new PDA
operate a full week without needing to be recharged?”)
Physical risk: It is the risk to self and others that the product may pose. (“Is a cellular phone
really safe, or does it emit harmful radiation?”)
Financial risk: It is the risk that the product will not be worth its cost. (“Will a new and cheaper
model of a plasma TV monitor become available six months from now”)
Social risk: it is the risk that a poor product choice may result in social embarrassment. (“Will
my classmates laugh at my purple Mohawk haircut?”).
Psychological risk: It is the risk that a poor product choice will bruise the consumer’s ego.
(“Will I be embarrassed when I invite friends to listen to music on my five year old stereo?”)
Time risk: It is the risk that the time spent in product search may be wasted if the product does
not perform as expected. (“Will I have to go through the shopping effort all over again?”)
How Consumers Handle Risk
1. Consumers seek information about products and product categories by word-of-mouth.
a) They spend more time considering their decision the higher the perceived risk.
2. Consumers are brand loyal.

a) Consumers avoid risk by staying with a brand they know and are satisfied with.
b) High-risk perceivers are the most brand loyal.
3. Consumers select by brand image.
a) When consumers lack experience with a product, they trust a well-known brand.
b) Consumers believe well-known brands are better and are worth buying for assured
quality.
4. Consumers rely on store image.
a) If consumers have no other information about a product, they judge it based on the
store.
b) Store image imparts the implication of product testing and assurance of service.
5. Consumers buy the most expensive model.
a) When in doubt, consumers equate price with quality.
6. Consumers seek reassurance.
a) Consumers, uncertain about a product choice, seek reassurance through guarantees,
tryouts, money-back offers, etc.
7. The concept of perceived risk has major implications for the introduction of new products.
a) Because high-risk perceivers are less likely to purchase new or innovative products than
low-risk perceivers, it is important for marketers to provide such consumers with
persuasive risk-reduction strategies.
Customer Relationship Management
Meaning
Customer relationship management (CRM) is an approach to managing a company's
interactions with current and future customers. It often involves using technology to organize,
automate, and synchronize sales, marketing, customer service, and technical support.
Significance of CRM
1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers. This helps in reduced searching and correlating customers and to
foresee customer needs effectively and increase business.

2. CRM contains each and every bit of details of a customer, hence it is very easy for track a
customer accordingly and can be used to determine which customer can be profitable and
which not.
3. In CRM system, customers are grouped according to different aspects according to the
type of business they do or according to physical location and are allocated to different
customer managers often called as account managers. This helps in focusing and
concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful in
acquiring new customers. The process first starts with identifying a customer and
maintaining all the corresponding details into the CRM system which is also called an
‘Opportunity of Business’. The Sales and Field representatives then try getting business
out of these customers by sophistically following up with them and converting them into
a winning deal. All this is very easily and efficiently done by an integrated CRM system.
5. The strongest aspect of Customer Relationship Management is that it is very cost-effective.
The advantage of decently implemented CRM system is that there is very less need of
paper and manual work which requires lesser staff to manage and lesser resources to deal
with. The technologies used in implementing a CRM system are also very cheap and
smooth as compared to the traditional way of business.
6. All the details in CRM system is kept centralized which is available anytime on fingertips.
This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually need
increases the customer satisfaction. This increases the chance of getting more business
which ultimately enhances turnover and profit.
8. If the customer is satisfied they will always be loyal to you and will remain in business
forever resulting in increasing customer base and ultimately enhancing net growth of
business.

Types of CRM
Operational CRM
Operational CRM provides support to "front office" business processes, e.g. to sales, marketing
and service staff. Interactions with customers are generally stored in customers' contact histories,
and staff can retrieve customer information as necessary.
The contact history provides staff members with immediate access to important information on
the customer (products owned, prior support calls etc.), eliminating the need to individually
obtain this information directly from the customer.
Operational CRM processes customer data for a variety of purposes:
• 'Managing Campaigns'
• Enterprise Marketing Automation
• Sales Force Automation

Sales Force Automation (SFA)
Sales Force Automation automates sales force-related activities such as:
• Scheduling sales calls or mailings
• Tracking responses
• Generating reports
Analytical CRM
Analytical CRM analyzes customer data for a variety of purposes:
• Designing and executing targeted marketing campaigns
• Designing and executing campaigns, e.g. customer acquisition, cross-selling, up-selling
• Analysing customer behavior in order to make decisions relating to products and services
(e.g. pricing, product development)
• Management decisions (e.g. financial forecasting and customer profitability analysis)
Analytical CRM generally makes heavy use of data mining.
Sales Intelligence CRM
Sales Intelligence CRM is similar to Analytical CRM, but is intended as a more direct sales tool.
Features include alerts sent to sales staff regarding:
• Cross-selling/Up-selling/Switch-selling opportunities
• Customer drift

• Sales performance
• Customer trends
• Customer margins
Collaborative CRM
Collaborative CRM covers aspects of a company's dealings with customers that are handled by
various departments within a company, such as sales, technical support and marketing. Staff
members within the departments can share information collected when interacting with
customers. For example, feedback received by customer support agents can provide other staff
members with information on the services and features requested by customers. Collaborative
CRM's ultimate goal is to use information collected by all departments to improve the quality of
services provided by the company.
Strategies for building Relationship Marketing
 Personalization
It describes the social content of the interaction between service employees and their
customers. It can be regarded as a means showing recognition and respect ex: feeling of
familiarity, personal recognition, friendship and friendship and social support by retailer.
Sometimes retailers recognition customers calling by their name.
 Special Treatment benefit
Relationship marketing does not tell to maintain relationship with all customers.
Customer focus and selectivity is the key aspect of Relationship marketing. It emphasizes
relationship with the loyal customers. Differentiation required between loyal and non
loyal one. Up gradation and service augmentation are the ways to provide special
Treatment benefit to the loyal customers.
 Communication benefits
Efforts must be taken “stay in touch” with customers is the key determinants of
Relationship Marketing. Companies use Direct mail, e-mail and telephone and SMS
service to keep in touch with the customers.

e-CRM
Meaning:
The e-CRM or electronic customer relationship management encompasses all
the CRM functions with the use of the net environment i.e., intranet, extranet and internet.
Electronic CRM concerns all forms of managing relationships with customers making use of
information technology (IT).
Importance of e-CRM
Channels through which companies can communicate with its customers, are growing by the
day, and as a result, getting their time and attention has turned into a major challenge. One of the
reasons eCRM is so popular nowadays is that digital channels can create unique and positive
experiences – not just transactions – for customers. An extreme, but ever growing in popularism,
example of the creation of experiences in order to establish customer service is the use of Virtual
Worlds, such as Second Life. Through this so-called vCRM, companies are able to create
synergies between virtual and physical channels and reaching a very wide consumer base.
However, given the newness of the technology, most companies are still struggling to identify
effective entries in Virtual Worlds. Its highly interactive character, which allows companies to
respond directly to any customer’s requests or problems, is another feature of eCRM that helps
companies establish and sustain long-term customer relationships.
Difference between CRM and e-CRM
Customer contacts
 CRM – Contact with customer made through the retail store, phone, and fax.
 eCRM – All of the traditional methods are used in addition to Internet, email, wireless,
and PDA technologies.
System interface
 CRM – Implements the use of ERP systems, emphasis is on the back-end.
 eCRM – Geared more toward front end, which interacts with the back-end through use of
ERP systems, data warehouses, and data marts.
System overhead (client computers)
 CRM – The client must download various applications to view the web-enabled
applications. They would have to be rewritten for different platform.

 eCRM – Does not have these requirements because the client uses the browser.
Customization and personalization of information
 CRM – Views differ based on the audience, and personalized views are not available.
Individual personalization requires program changes.
 eCRM – Personalized individual views based on purchase history and preferences.
Individual has ability to customize view.
System focus
 CRM – System (created for internal use) designed based on job function and products.
Web applications designed for a single department or business unit.
 eCRM – System (created for external use) designed based on customer needs. Web
application designed for enterprise-wide use.
System maintenance and modification
 CRM – More time involved in implementation and maintenance is more expensive
because the system exists at different locations and on various servers.
 eCRM – Reduction in time and cost. Implementation and maintenance can take place at
one location and on one server.

Module-4
Individual Influences on consumer Behaviour: Part 2
Learning
Meaning
Consumer learning is the process by which individuals acquire the purchase and consumption
knowledge and experience they apply to future related behavior. Some learning is intentional;
much learning is incidental. Basic elements that contribute to an understanding of learning are
motivation, cues, response, and reinforcement.
Elements of consumer learning
1. Consumer learning can be thought of as the process by which individuals acquire the
purchase and consumption knowledge and experience that they apply to future related
behavior.
2. Several points in this definition are worth noting.
a) First, consumer learning is a process; that is, it continually evolves and changes as a
result of newly acquired knowledge or from actual experience.
b) Both newly acquired knowledge and personal experience serve as feedback to the
individual and provide the basis for future behavior in similar situations.
3. The term learning encompasses the total range of learning, from simple, almost reflexive
responses to the learning of abstract concepts and complex problem solving.
a) Most learning theorists recognize the existence of different types of learning and explain
the differences through the use of distinctive models of learning.
Motivation
1. Motivation is based on needs and goals.
a) The degree of relevance, or involvement, with the goal, is critical to how motivated the
consumer is to search for information about a product.
2. Uncovering consumer motives is one of the prime tasks of marketers, who try to teach
consumer segments why their product will best fulfill their needs.
Cues
1. If motives serve to stimulate learning, cues are the stimuli that give direction to the motives.

a) In the marketplace, price, styling, packaging, advertising, and store displays all serve as
cues to help consumers fulfill their needs.
2. Cues serve to direct consumer drives when they are consistent with their expectations.
Response
1. How individuals react to a cue—how they behave—constitutes their response.
2. A response is not tied to a need in a one-to-one fashion.
3. A need or motive may evoke a whole variety of responses.
4. The response a consumer makes depends heavily on previous learning; that, in turn, depends
on how related responses were reinforced previously.
Reinforcement
1. Reinforcement increases the likelihood that a specific response will occur in the future as the
result of particular cues or stimuli.
2. An action always has a reaction; based on the reaction, the behavior gets reinforced. In other
words, if the action (behavior) is followed by a reaction that is positive or pleasant or
rewarding, the action (behavior) gets positively reinforced; the likelihood of repetition of that
action (behavior) increases.
3. The same holds true vice versa. If the action (behavior) is followed by a reaction that is
negative or unpleasant or unrewarding, the action (behavior) gets negatively reinforced; and
the likelihood of repetition of that action (behavior) decreases.
Marketing applications of Behavioural Learning theories

1. Behavioral learning theories are sometimes called stimulus-response theories.
a) When a person responds in a predictable way to a known stimulus, he or she is said to
have “learned.”
2. Behavioral theories are most concerned with the inputs and outcomes of learning, not the
process.
3. Two theories relevant to marketing are classical conditioning and instrumental (or operant)
conditioning.
Classical Conditioning
1. Early classical conditioning theorists regarded all organisms as passive recipients.

a) Conditioning involved building automatic responses to stimuli.

Pavlovian Model
2. Ivan Pavlov was the first to describe conditioning and to propose it as a general model of
how learning occurs.
a) For Pavlov, conditioned learning results when a stimulus that is paired with another
stimulus elicits a known response and serves to produce the same response when used
alone.
b) He used dogs to demonstrate his theories.
c) The dogs were hungry and highly motivated to eat.
d) Pavlov sounded a bell and then immediately applied a meat paste to the dogs’ tongues,
which caused them to salivate.
e) After a sufficient number of repetitions of the bell sound, followed almost immediately
by the food, the bell alone caused the dogs to salivate.
3. In a consumer behavior context, an unconditioned stimulus might consist of a well-known
brand symbol (e.g., the Microsoft “windows” icon) that implies technological superiority and
trouble-free operation (the unconditioned response).
4. Conditioned stimuli might consist of new products bearing well-known symbols.
Cognitive Associative Learning
1. Recent conditioning theory views classical conditioning as the learning of associations
among events that allows the organism to anticipate and “represent” its environment.
2. The relationship (i.e., contiguity) between the conditioned stimulus and the unconditioned
stimulus (the bell and the meat paste) influenced the dogs’ expectations, which in turn
influenced their behavior (salivation).
3. Classical conditioning is seen as cognitive associative learning not the acquisition of new
reflexes, but the acquisition of new knowledge about the world.
4. Optimal conditioning—that is, the creation of a strong association between the conditioned
stimulus (CS) and the unconditioned stimulus (US)—requires forward conditioning; that is,
the CS should precede the US, repeated pairings of the CS and the US, a CS and US that
logically belong together, a CS that is novel and unfamiliar, and a US that is biologically or
symbolically salient.

Neo-Pavlovian Model
5. Under neo-Pavlovian conditioning, the consumer can be viewed as an information seeker
who uses logical and perceptual relations among events, along with his or her own
preconceptions, to form a sophisticated representation of the world.
Strategic Applications of Classical Conditioning
1. Three basic concepts derive from classical conditioning: repetition, stimulus generalization,
and stimulus discrimination.
2. Repetition works by increasing the strength of the association and by slowing the process of
forgetting.
a) After a certain number of repetitions retention declines.
b) This effect is known as advertising wearout and can be decreased by varying the
advertising messages.
c) Wearout may be avoided by varying the message through cosmetic variation or
substantive variation.
3. Some don’t agree about how much repetition is needed.
a) The three-hit theory states that the optimum number of exposures to an ad is three.
i) One to make the consumer aware of the product.
ii) A second to show consumers the relevance of the product.
iii) A third to remind them of its benefits.
4. The effectiveness of repetition is somewhat dependent upon the amount of competitive
advertising to which the consumer is exposed.
a) As exposure increases, the potential for interference increases.
5. According to classical conditioning theorists, learning depends not only on repetition, but
also on the ability of individuals to generalize.
6. Stimulus generalization explains why imitative “me too” products succeed in the
marketplace: consumers confuse them with the original product they have seen advertised.
a) It also explains why manufacturers of private label brands try to make their packaging
closely resemble the national brand leaders.

7. The principle of stimulus generalization is applied by marketers to product line, form, and
category extensions.
a) In product line extensions, the marketer adds related products to an already established
brand, knowing that the new product is more likely to be adopted when it is associated
with a known and trusted brand name.
i) Conversely, it is much more difficult to develop a totally new brand.
b) Marketers offer product form extensions that include different sizes, different colors,
and even different flavors.
c) Product category extensions generally target new market segments.
i) The success of this strategy depends on a number of factors.
ii) For example, if the image of the parent brand is one of quality, consumers are more
likely to bring positive associations to the new category extensions.
8. Family branding—the practice of marketing a whole line of company products under the
same brand name—is another strategy that capitalizes on the consumer’s ability to generalize
favorable brand associations from one product to the next.
9. Retail private branding often achieves the same effect as family branding.
a) For example, Wal-Mart used to advertise that its stores carried only “brands you trust.”
Now, the name Wal-Mart itself has become a “brand” that consumers have confidence
in, and the name confers brand value on Wal-Mart’s store brands.
10. Licensing—allowing a well-known brand name to be affixed to products of another
manufacturer—is a marketing strategy that operates on the principle of stimulus
generalization.
11. Corporations also license their names and trademarks, usually for some form of brand
extension, where the name of the corporation is licensed to the maker of a related product
and thereby enters a new product category.
12. Municipal and state governments have begun licensing their names to achieve new sources of
revenue. The Vatican Library licenses its name for a variety of products from luggage to bed
linens.

13. The increase in licensing has made counterfeiting a booming business, as counterfeiters add
well-known licensor names to a variety, of products without benefit of control or quality
control
14. Stimulus discrimination is the opposite of stimulus generalization and results in the selection
of specific stimulus from among similar stimuli.
a) The consumer’s ability to discriminate among similar stimuli is the basis of positioning
strategy, which seeks to establish a unique image for a brand in the consumer’s mind.
15. The key to stimulus discrimination is effective positioning, a major competitive advantage.
a) The image, or position, that a product or service has in the mind of the consumer is
critical to its success.
b) Unlike the imitator who hopes consumers will generalize their perceptions and attribute
special characteristics of the market leader’s products to their own products, market
leaders want the consumer to discriminate among similar stimuli.
16. Most product differentiation strategies are designed to distinguish a product or brand from
that of competitors on the basis of an attribute that is relevant, meaningful, and valuable to
consumers.
17. It often is quite difficult to unseat a brand leader once stimulus discrimination has occurred.
a) In general, the longer the period of learning—of associating a brand name with a
specific product—the more likely the consumer is to discriminate, and the less likely to
generalize the stimulus.
18. The principles of classical conditioning provide the theoretical underpinnings for many
marketing applications.
a) Repetition, stimulus generalization, and stimulus discrimination are all major applied
concepts that help explain consumer behavior.
Instrumental Conditioning
 Like classical conditioning, instrumental conditioning requires a link between a stimulus

and a response.
b) However, in instrumental conditioning, the stimulus that results in the most satisfactory
response is the one that is learned.

 Instrumental learning theorists believe that learning occurs through a trial-and-error

process, with habits formed as a result of rewards received for certain responses or
behaviors.
c) Although classical conditioning is useful in explaining how consumers learn very
simple kinds of behaviors, instrumental conditioning is more helpful in explaining
complex, goal-directed activities.
 According to American psychologist B. F. Skinner, most individual learning occurs in a

controlled environment in which individuals are “rewarded” for choosing an appropriate
behavior.
d) In consumer behavior terms, instrumental conditioning suggests that consumers learn by
means of a trial-and-error process in which some purchase behaviors result in more
favorable outcomes (i.e., rewards) than other purchase behaviors.
e) A favorable experience is instrumental in teaching the individual to repeat a specific
behavior.
 Like Pavlov, Skinner developed his model of learning by working with animals.
f) In a marketing context, the consumer who tries several brands and styles of jeans before
finding a style that fits her figure (positive reinforcement) has engaged in instrumental
learning.
Reinforcement of Behavior
1. Skinner distinguished two types of reinforcement (or reward) influence , which provided that
the likelihood for a response would be repeated.
a) The first type, positive reinforcement, consists of events that strengthen the likelihood
of a specific response.
b) Negative reinforcement is an unpleasant or negative outcome that also serves to
encourage a specific behavior.
i) Fear appeals in ad messages are examples of negative reinforcement.
c) Either positive or negative reinforcement can be used to elicit a desired response.
d) Negative reinforcement should not be confused with punishment, which is designed to
discourage behavior.

2. Forgetting and extinction—when a learned response is no longer reinforced, it diminishes to

the point of extinction; that is, to the point at which the link between the stimulus and the
expected reward is eliminated.
a) Forgetting is often related to the passage of time; this is known as the process of decay.
b) Marketers can overcome forgetting through repetition and can combat extinction
through the deliberate enhancement of consumer satisfaction.
Strategic Applications of Instrumental Conditioning
1. The objective of all marketing efforts should be to maximize customer satisfaction.
2. Aside from the experience of using the product itself, consumers can receive reinforcement
from other elements in the purchase situation, such as the environment in which the
transaction or service takes place, the attention and service provided by employees, and the
amenities provided.
a) Some hotels provide reinforcement to guests in the form of small amenities.
b) Most frequent shopper programs are based on enhancing positive reinforcement and
encouraging continued patronage.
3. Relationship marketing—developing a close personalized relationship with customers—is
another form of non-product reinforcement.
4. Reinforcement schedules—marketers have found that product quality must be consistently
high and provide customer satisfaction with each use for desired consumer behavior to
continue.
5. Marketers have identified three types of reinforcement schedules: total (or continuous)
reinforcement, systematic (fixed ratio) reinforcement, and random (variable ratio)
reinforcement.
6. Variable ratios tend to engender high rates of desired behavior and are somewhat resistant to
extinction—perhaps because, for many consumers, hope springs eternal.
7. Shaping—the reinforcement of behaviors that must be performed by consumers before the
desired behavior can be performed is called shaping.
a) Shaping increases the probabilities that certain desired consumer behavior will occur.
8. Massed versus distributed learning—timing has an important influence on consumer
learning.

a) Question—should a learning schedule be spread out over a period of time (distributed

learning), or should it be “bunched up” all at once (massed learning)?
b) The question is an important one for advertisers planning a media schedule because
massed advertising produces more initial learning, although a distributed schedule
usually results in learning that persists longer.
c) When advertisers want an immediate impact (e.g., to introduce a new product or to
counter a competitors blitz campaign), they generally use a massed schedule to hasten
consumer learning.
d) When the goal is long-term repeat buying on a regular basis, however, a distributed
schedule is preferable.
e) A distributed scheduler with ads repeated on a regular basis, usually results in more
long-term learning and is relatively immune to extinction.
Elaboration Likelihood Model
1. The elaboration likelihood model (ELM) suggests that a person’s level of involvement
during message processing is the critical factor in determining the most effective route of
persuasion.
a) Thus, when involvement is high, consumers follow the central route and base their
attitudes or choices on the message arguments.
b) When involvement is low, they follow the peripheral route and rely more heavily on
other message elements to form attitudes or make product choices.
2. The marketing implications of the elaboration likelihood model are clear:
a) For high-involvement purchases, marketers should use arguments stressing the strong,
solid, high-quality attributes of their products—thus using the central (i.e., highly
cognitive) route.
b) For low-involvement purchases, marketers should use the peripheral route to
persuasion, focusing on the method of presentation rather than on the content of the
message (e.g., through the use of celebrity spokespersons or highly visual and symbolic
advertisements).

The marketing implications of the elaboration likelihood model

a) For high-involvement purchases, marketers should use arguments stressing the strong,
solid, high-quality attributes of their products—thus using the central (i.e., highly
cognitive) route.
b) For low-involvement purchases, marketers should use the peripheral route to
persuasion, focusing on the method of presentation rather than on the content of the
message (e.g., through the use of celebrity spokespersons or highly visual and symbolic
advertisements).
Attitude
Basics of Attitude
An attitude is a learned predisposition to behave in a consistently favorable or unfavorable
way with respect to a given object.
Nature of Attitude
The Attitude “Object”
1. Object refers to such things as: product, product category, brand, service, possessions,
product use, advertisement price, or retailer.
a) In attitude research we tend to be object-specific.
Attitudes Are a Learned Predisposition
1. Attitudes are learned.
a) They are formed as a result of direct experience with the product, information acquired
from others, and exposure to mass media.
b) Although attitudes may result in behaviors, they are, however, not synonymous with
behavior.
2. As learned predispositions, attitudes have a motivational quality.
Attitudes Have Consistency
1. Attitudes are relatively consistent with the behavior they reflect.
a) Attitudes are not necessarily permanent; they do change.
b) We should consider situational influences on consumer attitudes and behavior.
Attitudes Occur Within a Situation
1. Consumer attitudes occur within, and are affected by, the situation.

a) By situation we mean events or circumstances that, at a particular time, influence the

relationship between an attitude and a behavior.
2. Individuals can have a variety of attitudes toward a particular behavior, each tied to a specific
situation.
a) This can cause consumers to behave in ways seemingly inconsistent with their attitudes.
3. It is important when measuring attitudes that we consider the situation in which the behavior
takes place, or the relationship between attitudes and behavior could be misinterpreted.
Models of Attitude and Marketing Implication
Psychologists have developed a number of models in order to understand consumer attitudes.
Each of these models provides a somewhat different perspective on the number of component
parts of an attitude and how those parts are arranged or interrelated.
Tricomponent Attitude Model
1. According to the tricomponent attitude model, attitudes consist of three major components:
cognition, affect, and conation.
The Cognitive Component
1. Cognitions are previous knowledge or experiences with or about the object.
a) This previous knowledge/experience allows the consumer to form perceptions or beliefs
about the product.
The Affective Component
1. The affective component of an attitude consists of the consumer’s emotions or feelings.
a) Researchers frequently treat these emotions and feelings as evaluative in nature.
2. Affect-laden experiences manifest themselves as emotionally charged states (such as
happiness or sadness).
a) These states may enhance positive or negative experiences for the consumer.
3. Consumer researchers try to measure this element using global evaluative measures.
The Conative Component
1. Conation, the final component of the tricomponent attitude model, is concerned with the
likelihood or tendency that an individual will undertake a specific action or behave in a
particular way with regard to the attitude object.
a) The conative component may include the actual behavior itself.

2. In marketing and consumer research, the conative component is frequently treated as an

expression of the consumer’s intention to buy.
a) Intention-to-buy scales are used to assess the likelihood of a consumer purchasing a
product or behaving in a certain way.
Multi-Attribute Attitude Models

1. Multi-attribute attitude models examine attitudes in terms of selected product attributes or
beliefs.
The Attitude-Toward-Object Model
1. According to the attitude-toward-object model, the consumer’s attitude toward a product or
specific brands of a product is a function of the presence (or absence) and evaluation of
certain product-specific beliefs and/or attributes.
2. What consumers will purchase is a function of how much they know, what they feel are the
important features for them, and their awareness as to whether particular brands possess (or
lack) these valued attributes.
The Attitude-Toward-Behavior Model
1. The attitude-toward-behavior model is the individual’s attitude toward behaving or acting
with respect to an object, rather than the attitude toward the object itself.
2. The appeal of this model is that it seems to correspond somewhat more closely to actual
behavior than does the attitude-toward-object model.
Persuasive communication
1. Communication is the unique tool that marketers use to persuade consumers to act in a
desired way.
2. Communication takes many forms: it can be verbal (either written or spoken), visual (an
illustration, a picture, a product demonstration, a frown), or a combination of the two.
a) It can also be symbolic—represented, say, by a high price, premium packaging, or a
memorable logo—and convey special meaning that the marketer wants to impart.
3. Communication can evoke emotions that put consumers in a more receptive frame of mind,
and it can encourage purchases that help consumers solve problems or avoid negative
outcomes.

4. In short, communication is the bridge between marketers and consumers, and between
consumers and their sociocultural environments.
Communications Strategy
1. The sponsor must first establish the primary communications objectives, which might be
awareness, promoting sales, encouraging certain practices, etc.
2. For a long time, the cognitive models were used to describe the communications process.
3. Today, other models are gaining popularity.
a) One example is a model based on the key factors of perception, experience, and
memory.
Target Audience
1. Selection of the appropriate audience is key.
a) It is essential that the sponsor segment the audience into groups that are homogeneous
in terms of some relevant characteristic.
b) This enables the marketer to create specific messages for each target group and run
them in specific media that are seen or heard by each target group.
2. There is a need for an umbrella message for all audiences from which they spin off specific
messages for targeted segments.
3. Many organizations use public relations professionals to help them maintain a positive
corporate image.
Media Strategy
1. First, the sponsor should develop a consumer profile of the target market.
2. Next, a medium with an appropriate audience profile needs to be selected.
3. Before selecting a specific medium, the advertiser needs to select a general media category
that will enhance the message.
4. Once marketers have identified the appropriate media category, they can then choose the
specific medium (or media) in that category that reaches their intended audiences.
Message Strategies
1. The message is the thought, idea, attitude, image, or other information that the sender wishes
to convey to the intended audience.

2. Senders must recognize what they are trying to say and their audiences’ characteristics so
they can encode the message appropriately.
3. Nonverbal stimuli, such as photographs or illustrations, are commonly used to add meaning
or to reinforce message arguments.
Message Structure and Presentation
1. Some of the decisions that marketers must make in designing the message include the use of
resonance, positive or negative message framing, one-sided or two-sided messages,
comparative advertising, and the order of presentation.
2. Advertising resonance is defined as wordplay, often used to create a double meaning, used in
combination with a relevant picture.
a) Using insights provided by semiotics, researchers have found that by manipulating the
resonance in an ad, they can improve consumer attitudes toward the ad and the brand, and
unaided recall of advertising headlines.
3. Should a marketer stress the benefits to be gained by using a specific product (positive
message framing), or the benefits to be lost by not using the product (negative message
framing)?
a) Research suggests that the appropriate message-framing decision depends on the target
audience’s level of involvement with the product category.
4. One-sided messages tell consumers only the good points (benefits).
a) This is most effectively used when the target audience has previously used the
advertiser’s products.
5. Two-sided messages tell consumers both good (benefits) and bad (disadvantages) points of
the product.
a) These are most effectively used when the target audience uses a competitor’s products.
6. Comparative advertising claims product superiority over one or more explicitly named or
identified competitors.
a) Comparative advertising is useful in product positioning, target market selection, and
brand positioning strategies that stress the differential advantage of the “underdog”
product over leading brands.

b) A downside to comparative ads may be that they assist recall of the competitor’s brand at
the expense of the advertised brand.
c) Positively comparative ads were found to elicit higher levels of processing activity (high-
involvement), had better recall than noncomparative ads, and were perceived as more
relevant.
7. Order effects—communications researchers have found that the order in which a message is
presented affects audience receptivity.
a) On television, the position of a commercial in a commercial pod can be critical.
b) The commercials shown first are recalled best, those in the middle the least.
c) There is also evidence to suggest that television commercials that interrupt an exciting or
suspenseful part of a program tend to have lower recall than those presented during a less
gripping moment.
d) When just two competing messages are presented, one after the other, the evidence as to
which position is more effective is somewhat conflicting.
e) Magazine publishers recognize the impact of order effects by charging more for ads on
the front, back, and inside covers of magazines than for the inside magazine pages,
because of their greater visibility and recall.
f) Order is also important in listing product benefits within an ad.
g) If audience interest is low, the most important point should be made first to attract
attention.
h) If interest is high, however, it is not necessary to pique curiosity, and so product benefits
can be arranged in ascending order, with the most important point mentioned last.
i) When both favorable information and unfavorable information are to be presented (e.g.,
in an annual stockholders’ report), placing the favorable material first often produces
greater tolerance for the unfavorable news.
j) It also produces greater acceptance and better understanding of the total message.
8. Repetition—is an important factor in learning.
a) It is not surprising that repetition, or frequency of the ad, affects persuasion, ad recall,
brand name recall, and brand preferences.

b) It also increases the likelihood that the brand will be included in the consumer’s
consideration set.
c) One study found that multiple message exposures gave consumers more opportunity to
internalize product attributes, to develop more or stronger cue associations, more positive
attitudes, and increased willingness to resist competitive counterpersuasion efforts.
Advertising Appeals
1. Factual and emotional appeal effectiveness varies with the circumstance and the audience.
a) Reason-why appeals are more effective in persuading educated audiences.
b) Emotional appeals are more effective in persuading less educated audiences.
2. Fear Appeals—some researchers have found a negative relationship between the intensity of
fear appeals and their ability to persuade.
a) The mention of possible harmful effects of a product category or usage situation causes
negative attitudes toward the product.
b) Some researchers have found a positive relationship between fear and persuasiveness.
c) When the audience focuses on controlling the danger rather than the fear, there is an
acceptance of the message.
d) There is some indication that the mention of possible harmful effects of using a product
category although proclaiming the benefits of the advertised product results in negative
attitudes toward the product itself.
3. Humor—a significant portion of ads use humor because marketers believe it increases ad
effectiveness.
a) Humor should be used selectively because there are so many qualifying conditions to its
effectiveness.
b) Audience characteristics have a significant impact.
4. Abrasive advertising—they work because of the sleeper effect as only the brand name and
the persuasive message are retained over time.
a) All of us have at one time or another been repelled by so-called agony commercials,
which depict in diagrammatic detail the internal and intestinal effects of heartburn,
indigestion, clogged sinus cavities, hammer-induced headaches, and the like.

b) Nevertheless, pharmaceutical companies often run such commercials with great success
because they appeal to a certain segment of the population that suffers from ailments that
are not visible, and which therefore elicit little sympathy from family and friends.
5. Sex in advertising—there is more daring sexual imagery, extending far beyond the traditional
product categories of fashion and fragrance, into such categories as shampoo, beer, cars, and
resorts.
a) A study that examined the effects of sexual advertising appeals on cognitive processing
and communication effectiveness found that sexual appeals interfere with message
comprehension, particularly when there is substantial information to be processed.
b) It also found that more product-related thinking occurs in response to nonsexual appeals,
and that visual sexual elements in the ad are more likely to be processed than the verbal
content, drawing cognitive processing away from product or message evaluation.
c) These and other findings support the theory that sexual advertising appeals often detract
from the processing of message content.
d) There are strong indications that the type of interest that sex evokes often stops exactly
where it started—with sex.
e) Some researchers have concluded that nudity may negatively impact the product
message.
f) The advertiser may be giving up persuasiveness to achieve “stopping power.”
g) One thread seems to run through all the research findings regarding sex in advertising:
h) The advertiser must be sure that the product, the ad, the target audience, and the use of
sexual themes and elements all work together.
6. Audience participation—the provision of feedback changes the communications process
from one-way to two-way communication.
a) This is important to senders, because it enables them to determine whether and how well
communication has taken place.
b) It also is important to receivers, because it enables them to participate, to be involved, to
experience in some way the message itself.

c) Although participation is easily accomplished in interpersonal situations and drives the

interactivity of cyber communications, it takes a great deal of ingenuity to achieve in
impersonal communications.

Module 5
Social Class
The division of members of a society into a hierarchy of distinct status classes, so that members
of each class have either higher or lower status than members of other classes.
Social class & social Status
• Researchers often measure social class in terms of social status; that is, they define each
social class by the amount of status the members of that class have in comparison with
members of other social classes.
• Status is frequently thought of as the relative rankings of members of each social class
– Wealth (amount of Economic asset)
– Power (the degree of personal choice or influence over others)
– Prestige (the degree of recognition received from others)
 To secure an understanding of how status operates within the minds of consumers,

researchers have explored the idea of social comparison theory.
o Social Comparison Theory states that individuals compare their own possessions
against those of others to determine their relative social standing.
The dynamics of status consumption
 It is the process by which consumers actively increase their social standing through
conspicuous consumption or possessions.
 It is important to mention that a recent study in Australia examined the two interrelated
concepts of status and conspicuous consumption with respect to fashion clothing and
sunglasses (both product are visible or conspicuous to others and capable of providing the
possessor with “status”).
The research found that status consumption (i.e. gauges the degree to which the consumer is to
consume conspicuously) are different consumer measures, yet they are related in that they both
are impacted by interpersonal or word of mouth communication.
• Social status is usually defined in terms of one or more of the following socioeconomic
variables:
– Family Income

– Occupational Status
– Educational Attainment
Features of social class
 Is hierarchical
 Is a natural form of segmentation
 Provides a frame of reference for consumer behaviour
 Reflects a person’s relative social status
 In Canada, individuals can up or down the social class hierarchy
Five social-class categories in India
The Upper-Upper Class--Country Club
• Small number of well-established families
• Belong to best country clubs and sponsor major charity events
• Serve as trustees for local colleges and hospitals
• Prominent physicians and lawyers
• May be heads of major financial institutions, owners of major long-established firms
• Accustomed to wealth, so do not spend money conspicuously
The Lower-Upper Class--New Wealth
• Not quite accepted by the upper crust of society
• Represent “new money”
• Successful business executive
• Conspicuous users of their new wealth
The Upper-Middle Class--Achieving Professionals
• Have neither family status nor unusual wealth
• Career oriented
• Young, successful professionals, corporate managers, and business owners
• Most are college graduates, many with advanced degrees
• Active in professional, community, and social activities
• Have a keen interest in obtaining the “better things in life”
• Their homes serve as symbols of their achievements
• Consumption is often conspicuous

• Very child oriented

The Lower-Middle Class--Faithful Followers
• Primary non-managerial white-collar workers and highly paid blue-collar workers
• Want to achieve “respectability” and be accepted as good citizens
• Want their children to be well behaved
• Tend to be churchgoers and are often involved in church-sponsored activities
• Prefer a neat and clean appearance and tend to avoid faddish or highly-styled clothing
• Constitute a major market for do-it-yourself products
The Lower-Lower Class--Rock Bottom
• Poorly educated, unskilled laborers
• Often out of work
• Children are often poorly treated
• Tend to live a day-to-day existence
Culture and Subculture
Major focus on Indian perspective culture
Meaning of Culture
The sum total of learned beliefs, values, and customs that serve to direct the consumer behavior
of members of a particular society.
Characteristics of culture
1) Culture Satisfies Needs:
Culture Satisfies Needs Culture exists to satisfy the needs of people within a society. It offers
order, direction, and guidance in all phases of human problem solving by providing tried and true
methods of satisfying physiological, personal, and social needs. Similarly, culture also provides
insights as to suitable dress for specific occasions (e.g., what to wear around the house, what to
wear to school, what to wear to work, what to wear to church, what to wear at a fast food
restaurant, or a movie theater). Cultural beliefs, values, and customs continue to be followed as
long as they yield satisfaction. In a cultural context, when a product is no longer acceptable
because it’s related value or custom does not adequately satisfy human needs, it must be
modified.

2) Culture is socially acquired:

2) Culture is socially acquired We are not born with any cultural knowledge It is the society
which teaches an individual its various cultures and norms of behaving in the society Our society
plays a vital role in teaching its culture to an individual Sometimes people strictly follow their
culture only because of the fear of the society
3)Culture is Dynamic:
Culture is Dynamic To fulfill the need gratifying role, culture continually must evolve if it is to
function in the best interests of a society. The marketers must carefully monitor the socio culture
environment in order to market an existing product effectively or to develop promising new
products. The changing nature of culture means that marketers have to consistently reconsider:
Why consumers are now doing what they do? Who are the purchasers and the users of their
products? When they do their shopping? How and where they can be reached by the media?
What new product and service needs are emerging?
4)Culture is Shared :
Culture is Shared Culture is viewed as group customs that link together the members of the
society. Common language is the critical component that makes it possible for people to share
values, experiences, and customs. Social Institutions transmitting the element of culture and
sharing of culture Family : primary agent for enculturation Educational Institutions : imparts
learning skills, history, patriotism, citizenship and technical training. Religious Institutions :
Perpetuate religious consciousness, spiritual guidance, and moral training. Mass Media : wide
range of cultural values.
5)Culture is Learned:
Culture is Learned At an early age, we begin to acquire from our social environment a set of
beliefs, values, and customs that make up our culture. Anthropologists have identified three
distinct forms of cultural learning: 1. Formal learning : in which adults and older siblings teach a
young family member “How to behave”; 2 . Informal learning : in which a child learns primarily
by imitating the behavior of selected others, such as family, friends, or TV stars. 3. Technical
Learning : Which teachers instruct the child in an educational environment about what, how and
why it should be done. Advertising can influence all three types of cultural learning's.
Factors affecting culture

On cultural values systems.

 Ethics-good, moral, immoral.
 Aesthetics-beautiful, ugly, pleasant, unpleasant.
 Doctrine- political, social, ideological.
Role of values, belief and custom
 A belief is a proposition that reflects a person's particular knowledge and assessment of
something.
 Values are general statements that guide behavior and influence beliefs. The function of a
value system is to help a person choose between alternatives in everyday life.
 Customs are modes of behavior that constitute culturally approved ways of behaving in
specific situations. For example, taking one's mother out for dinner and buying her
presents for Mother's Day is an American custom.
Subculture division and consumption pattern in India:
Meaning of subculture
The members of a specific subculture possess beliefs, values, and customs that set them apart
from other members of the same society.
It is distinct cultural group that exists as an identifiable segment within a larger, more complex
society.
Types of Subcultures
Based on the varying criteria, there can be different types of sub-cultures. The important
subcultural categories are nationality, geographical location, religion, race and caste, gender and
age. From a marketing perspective, these could also be discussed as market segments, which
need to be studied and assessed carefully before deciding on a product/service offering and
formulating a marketing mix for a particular segment(s).
- Nationality: Sub-cultures could be based on nationality. While we are all Asians, we are
distinct with respect to culture, and are different in terms of language, customs and traditions etc.
Thus, we are classified as Indians, Burmese, Nepalese, Pakistani etc.
- Geographical location: Within a country, we could be different across geography, climatic
conditions, regions and terrains, and density of population. This is more so in cases where the
country is large and borders spread across a huge population occupying a vast territory. People

tend to develop regional affinity and identification, and this gets reflected in the food they eat,
clothes they wear, interests they pursue, etc. They constitute as distinct sub-cultures and people
across such sub-cultures are different to each other. For example, we can be classified as North
Indians and South Indians. As consumers, our needs are different and would translate into
various wants, for example, i) differences in food habits, and demand for poori-sabji, paratha,
idli-vada etc.; or ii) differences in clothing, and demand for cottons, woolens and silk.
- Religion: People also exhibit differences when it comes to the religions that they belong to.
Hindus, Muslims, Christians, Sikhs, Parsis etc. are all different from one another and have
different values and beliefs, customs and traditions etc. As consumers, they make purchase
choices and purchase decisions that are influenced by the dictates of their religious leaders,
scriptures, and holy books. In fact, many products/services are symbolically and ritualistically
associated with religion. For example, as per Islam, non-vegetarian food must be “Halal”, and
this itself comprises a huge segment that marketers across national boundaries are catering to.
Racial Subculture: Culture and its components also vary across race and caste. Jats, Jaats,
Rajputs, Pathans and Yadavs are all different from one another. Such racial sub-cultures also
impact buying behavior and consumption patterns.
- Gender: Because gender roles have an impact on acts of behavior, gender constitutes an
important cultural sub-group. Males and females across all cultures are assigned different traits
and characteristics that make them masculine and feminine. They also perform different roles in
society and are two distinct sub-groups. It is true that gender roles have got blurred, and both
men and women are performing such roles that they did not perform earlier. Product usage is
common to both man and woman; for example, a man shown as using a LG washing machine or
making Act II popcorn. Similarly products like shavers and razors exclusive to usage by men, are
also being used by women (Gillette thus introduced a razor for women). All this has brought
about a big socio-economic change and led to cultural transformation. The values espoused by
the generation of today is much different to the one espoused by the previous generation.
Age: Infants, kids, teenagers and adolescents, adults and the aged, may all be looked up as
distinct sub-groups. They have different values and beliefs, and all this impacts upon their
priorities in life. Daily lifestyles, activities and interests, fashion and accessories, food and diet,
etc. receive varying priorities across the various sub-groups. For example, an aged person would

prioritize health and go in for nutritious home food as opposed to young man who would
prioritize work and go in for fast food. Today we see a rising trend amongst kids, adolescents and
the young towards junk food, and they constitute a lucrative segment for restaurants providing
fast food.
Cross cultural consumer analysis:
Cross-cultural marketing is defined as “the effort to determine to what extent the consumers of
two or more nations are similar or different. This will facilitate marketers to understand the
psychological, social and cultural aspects of foreign consumers they wish to target, so as to
design effective marketing strategies for each of the specific national markets involved.”
To determine whether and how to enter in a foreign market, we need to conduct some form of
cross-cultural consumer analysis.

Cross-cultural consumer analysis can be defined as the effort to determine to what extent
the consumers of two or more nations are similar or different.

Such analysis can provide marketers with an understanding of the psychological, social,
and cultural characteristics of the foreign consumers they wish to target, so that they can
design effective marketing strategies for the specific national markets involved.

Similarities and differences among people
A major objective of cross-cultural consumer analysis is to determine how consumers in two or
more societies are similar and how they are different. According to some personality traits or
behavioral aspects of the consumer we can analyze the things.

Fight for one’s beliefs/positions

Individualistic

Clear-cut

Specific

Display emotions in public

Result oriented

Make a short story long

Verbal communication important

Interested in what is spoken

The Growing global middle class

Growing middle class in developing countries is a phenomenon that is very attractive to global
marketers who are often eager to identify new customers for their products. The news media has
given considerable coverage to the idea that the rapidly expanding middle class in countries of
Asia, South America, and Eastern Europe is based on the reality that, although per capita income
may be low, there is nevertheless considerable buying power in a country such as China, where
1,500 dollars of income is largly discretionary income. This means that a Chinese family with
1,500 dollars is middle class and is a target customer for TVs, VCRs, and computers.

Acculturation is a needed marketing view point
Too many marketers contemplating international expansion make the strategic error of believing
that if its product liked by local or domestic consumers, then everyone will; like it. This biased
viewpoint increases the likelihood of marketing failures abroad. It reflects a lack of appreciation
of the unique psychological, social, cultural, and environmental characteristics of distinctly
different cultures. To overcome such a narrow and culturally myopic view, marketers must also
go through an acculturation process.
Applying research techniques cross-cultural marketing strategy
Although the same basic research techniques used to study domestic consumers are useful in
studying consumers in foreign lands, in cross-cultural analysis an additional burden exists
because language and word usage often differ from nation to nation. Another issue in
international marketing research concerns scales of measurement. In the united states, a 5 or 7
point scale may be adequate, but in other countries a 10 or even 20 point scale may be needed.
Still further, research facilities, such as telephone interviewing services, may or may not be
available in particular countries or areas of the world.
To avoid such research measurement problems, consumer researchers must familiarize
themselves with the availability of research services in the countries they are evaluating as
potential markets and must learn how to design marketing research studies that will yield usefull
data. Researchers must also keep in mind that cultural differences may make “standard” research
methodologies inappropriate.
Basic research issues in cross-cultural analysis

Differences in language and meaning, e.g. restroom

Difference in market segmentation opportunities, e.g. age while buying the first car


Difference in consumption patterns,

Difference in the perceived benefits of products and services, e.g. yogurt

Differences in the criteria for evaluating products and services, e.g. credit cards

Difference in economic and social conditions and family structure, e.g. family soap

Differences in marketing research and conditions, e.g. direct-mail lists

Differences in marketing research possibilities, e.g. telephone surveys
Problems in Cross Cultural marketing


Problems related to product selection: The marketer going for cross cultural marketing
has to select the customers / market not on the basis of the superficial similarities of age
or income, but by using the real motivating factors that prompt them to accept or reject
products.

Problems related to promotion/marketing communication: e.g. Ariel in the Middle East
and also Pepsi promotions according to the area and location.

Problems related to pricing: the marketer has to adjust his pricing policies according to
the local economic conditions and customs.

Problems related to selection of distribution channels
Strategies to overcome cross-cultural problems
As the managers and the employees in a multinational organization gradually understand the
dimensions and differences, it is the duty of both managers and the employees to adopt the
strategies to keep the diversity at bay. Following are the strategies which help us to overcome the
obstacles of cross-cultural differences;
1. Good knowledge of foreign culture:
The first strategy is acknowledging and admitting the existence of differences between cultures.
This mainly includes differences in perceptions, interpretations and evaluations of social
situations and people who create them and act within them. These differences than have to be
named, described, explained and understood. Recognition of the culture of a partner is
considered to be the first condition of mutual understanding and good cooperation. This step is
definitely neither common nor easy.
2. Respect of a foreign culture:

Respect of a foreign culture means most of all accepting their differences without any judgment.
It is not possible to claim that a certain culture is more perfect, "better" than another culture.
Cultures are different and for their members they represent optimum to manage life situations in
conditions they have been living in for a long time.
3. Helpful steps in the relationship to a foreign culture:
The next strategy of the recommended process should be the effort to find common solution,
mutual understanding and simplification of the complicated and demanding process of behaving
in different cultural conditions. These helpful steps in no case mean that the participating
partners should give up their cultural background, but it suggests that they should use their
knowledge of own culture to gain knowledge about the partner's culture, which can be quite easy
after all. Very often it is enough to sacrifice something that is not too important for us, but it
means a lot for another culture. The main condition is a very good knowledge of partners and
their cultural environment, though.
4. Ignore the cultural differences:
In this strategy, a stage comes where the managers ignore the differences. It later becomes
irrelevant as the managers and employees would be having a good understanding about each
others' cultures and practices as earlier they would learn to respect the cultures. The employees
and managers feel in this type of strategy that "our way is the only way" as it is also practices in
parochial type of organizations. The ignorance of diversity precludes effective management of
cultural differences and also precludes the possibility of minimizing negative impacts and
increasing positive impacts of diversity.
5. Minimize differences:
In this strategy, the managers recognize cultural differences but only as a source of problems.
This strategy is mostly adopted by ethnocentric organizations. In such organizations, managers
try to reduce the problems of differences by reducing cultural diversity. They do not think about
advantages of diversity. They try to either select a culturally homogenous workforce or attempt
to socialize all employees into behaviour patterns of dominant culture.
6. Managing differences:
This strategy is adopted by synergistic organizations. These organizations recognize the impacts
of cultural differences that lead to both advantages and disadvantages. The managers in

synergistic organizations believe that "our way and their way of believing and managing differ,
but neither is superior to other". In this case, the managers and employees minimize potential
problems by managing the impacts of cultural differences, not by minimizing the differences
themselves. Similarly, managers maximize the potential advantages by managing impacts of
cultural differences, rather than by ignoring them. The organizations which use the strategy of
managing differences train their managers and employees to recognize the cultural differences
and to use cultural differences to create advantages for the organizations.

Module-6
External influences on consumer behavior: Part 2
Groups
Meaning


Two or more people who interact to accomplish either individual or mutual goals
A membership group is one to which a person either belongs or would qualify for
membership (laughter club, housing societies)

A symbolic group is one in which an individual is not likely to receive membership despite
acting like a member ( Indian cricket team as reference to armature cricketers)
Nature of group

Conformity is not a uni-dimensional concept

Information influence
ô behaviours and opinions of reference groups are used as potentially useful pieces of
information

Normative influence (utilitarian influence)
ô when an individual fulfils group expectations to gain a direct reward or avoid a
sanction

Identification influence (value-expressive influence)
ô when an individual uses perceived-group norms and values as a guide for their own
attitudes or values
Reference Group
A person or group that serves as a point of comparison (or reference) for an individual in the
formation of either general or specific values, attitudes, or behavior.
Family
Meaning
Family is defined as two or more persons related by blood, marriage, or adoption who reside
together.

In the US today, 70% of the approximately 100 million households are families

Although all families are households, not all households are families


Despite changes, the family remains the central institution in providing for the welfare of
its members
The changing structure of family
Most people are born into a biological family, or family of origin. If a person is adopted or raised
in this family, it is her or his family of orientation. By leaving this family to marry or cohabit,
the individual becomes part of a family of procreation, the family a person forms by marrying
and/or having or adopting children. This term is somewhat dated, however, because in several
types of households— such as child-free or gay and lesbian families— procreation isn’t a key
function. Each type of family is part of a larger kinship system, a network of people who are
related by blood, marriage, or adoption. In much of the developing world, which contains most
of the earth’s population, the most common family form is the extended family. For nearly a
century, the nation’s family structure remained remarkably stable. Between 1880 and 1970, about
85 percent of all children lived in two parent households. Then, in the next three decades, the
numbers of divorces and single-parent families skyrocketed. By 2007, almost one in four
children was living in a mother-only home. Some people are concerned that the nuclear family
has dwindled. Many social scientists contend, however, that viewing the nuclear family as the
only normal or natural type of family ignores many other household forms. One researcher, for
example, identified 23 types of family structures, some of which include only friends or group-
home members (Wu, 1996). Family structures have varied not only across cultures and eras but
also within any particular culture or historical period.
Family decision making and consumption related roles:
Key family consumption roles

Individuals in each family are the key decision makers

Marketers need to know who in the family makes decisions in order to know whom to
target

Buying roles have changed significantly in recent times
Influencer: family member who provide information to other members about a product.
Gatekeeper: family member who control the flow of information about a product or service into
the family

Decider: family member with the power to determine unilaterally or jointly whether to shop for,
purchase, use, consume, or dispose of a specific product or service.
Buyer: family member who make the actual purchase of a particular product or service.
Preparers: family member who transform the product into a form suitable for consumption by
other family members
Users: family member who use or consume a particular product or service.
Maintainers: family member who service or repair the product so that it will provide continued
satisfaction.
Disposers: family member who initiate or carry out the disposal or discontinuation of a
particular product or service.

Number and identity of family members who fill these roles varies from family to family
and from product to product

Roles vary based on culture as well

Marketers need to know which family members make which decisions in order to develop
effective marketing strategies
Dynamics of husband-wife decision making
Marketers are interested in the relative amount of influence that a husband and a wife have when
it comes to family consumption choices. The relative influence of husbands and wives can be
classifies as: husband dominated, wife dominate, joint & autonomic.
The relative influence of a husband and wife on a particular consumer decision depends in part
on the product and service category. For instance, during 1950s, the purchase of a new
automobile was strongly husband dominated, whereas food and financial banking decisions more
often were wife dominated. Fifty years later, the purchase of the family’s principal automobile is
still often husband dominated in many households.
In another recent cross-cultural study, husband-wife decision making was studies among three
groups: Asian Indians living in India, Asian Indians living in the United States, and American
nationals. Results show a decrease in husband-dominated decisions and an increase in wife-
dominated decisions, going from Asian Indians in India, to Asian Indians in the United States, to
American nationals. This pattern seems to indicate the impact of assimilation on decision
making.

The expanding role of children in family decision making

Over the past several decades, there has been a trend toward children playing a more active role
in what the family buys, as well as in the family decision making process. This shift in influence
has occurred as a result of families having fewer children, more dual income couples who can
afford to permit their children to make greater number of the choices. Also the single parent
households often push their children toward household participation and self reliance. For
example kids in supermarkets with a parent make an average of 15 requests, of which about half
are typically granted. The table shows some of the tactics employed by children to influence their
parents.
Tactics used by children to influence their parents
Pressure tactics
The child makes demand uses threats, or intimidation to persuade you to comply with his /her
request
Upward appeal
The child seeks to persuade you, saying that the request was approved or supported by an older
member of the family, a teacher, or a family friend
Exchange tactics
The child makes an explicit or implicit promise to give you some sort of service such as washing
the car in return for the favour
Coalition tactics
The child seeks the aid of others to persuade you to comply with his /her request or uses the
support of others as an argument for you to agree with him/her
Ingratiating tactics
The child seeks to get you in a good mood or think favourably of him or her before asking you to
comply with a request.
Rational persuasion
The child uses logical arguments and factual evidence to persuade you to agree with his/her
request.
Inspirational appeals

The child makes an emotional appeal or proposal that arouses enthusiasm by appealing to your
values and ideas
Consultation tactics
The child seeks your involvement in making a decision
There is also research evidence supporting the notion that the extent to which children influence
a family’s purchases is related to family communication patterns. Teenagers who spend
considerable time on the internet and know how to search for and find information and respond
to requests from others to provide information. It has been shown that teen internet mavens
contribute significantly to the family’s decision making.
The family life cycle
Sociologists and consumer researchers have long been attracted to the concept of the family life
cycle (FLC) as a means of depicting what was once a rather steady and predictable series of
stages through which most families progressed. However, with the advent of many diverse
family and lifestyle arrangements, what was the rule has been on the decline. This decline in the
percentage of families that progress through a traditional FLC seems to be caused by a host of
societal factors, including a increasing divorce rate, the explosive number of out of wedlock
births, and the 35 year decline in the number of extended families that transpired as many young
families moved to advance their job and career opportunities.
FLC analysis enables marketers to segment families in terms of a series of stages spanning the
life course of a family unit. The FLC is a composite variable created by systematically
combining such commonly used demographic variables as marital status, size of family, age of
family members and employment status of the head of household. The ages of the parents and
the relative amount of disposable income usually are inferred from the stage in the family life
cycle.
FLC concept is divided into two sections. The first section considers the traditional FLC schema.
This model is increasingly being challenged because it fails to account for various important
family living arrangements. To rectify these limitations, the second section focuses on alternative
FLC stages, including increasingly important non-traditional family structures.
Traditional Family Lifecycle and Marketing Implications

The traditional family life cycle is a progression of stages through which many families pass,
starting with bachelorhood, moving on to marriage, then to family growth, to family contraction,
and ending with the dissolution of the basic unit. The traditional FLC models proposed over the
years can be synthesized into just five basic stages, as follows.
Stage I: Bachelorhood – young singles adult living apart from
parents Stage II: Honeymooners – young married couple
Stage III: Parenthood – married couple with at least one child living at home
Stage IV: Post parenthood- an older married couple with no children living at home
Stage V: Dissolution – one surviving spouse
Stage I: bachelorhood
The first FLC stage consists of young single men and women who have established households
apart from their parents. Although most members of this FLC stage are employed, many are
college or graduate students who have left their parents’ home. Young single adults are apt to
spend their incomes on rent, basic home furnishings, the purchase and maintenance of
automobiles etc. They have sufficient disposable income. Marketers target singles for a wide
variety of products and services. In cities there are travel agents, housing development, health
clubs sport clubs, and other service and product marketers that find this FLC stage lucrative
target niche.
Stage II: honeymooners
The honeymoon stage starts immediately after the marriage vows are taken and generally
continues until the arrival of the couple’s first child. This FLC stage serves as a period of
adjustment to married life. Because many young husbands and wives both work , these couples
have available a combined income that often permits a lifestyle that provides them with the
opportunities of more indulgent purchasing of possessions or allows them to save or invest heir
extra income. Honeymooners have considerable startup expenses in establishing a new home.
Stage III: parenthood
When a couple has it first child, the honeymoon is considered over. The parenthood stage usually
extends over more than a 20 year period. Because of its long duration, this stage can be divided
into shorter phases the preschool phase, the elementary school phase, the high school phase and
the college phase. Throughout these parenthood phases, the interrelationships of family members

and the structure of the family gradually change. Furthermore, the financial resource of the
family change significantly, as one parents progress in a career and as child rearing and
educational responsibilities gradually increase and finally decreases as children become self-
supporting.
Stage IV: post parenthood
Because parenthood extends over many years it is only natural to find that post parenthood when
all the children have left home, is traumatic for some parents and liberating for others. This so
called empty nest stage signifies for many parents almost a rebirth, a time for doing all the things
they could not do while the children were at home and they had to worry about soaring
educational expenses.
It is during this stage that married couples tend to be most comfortable financially. Today’s
empty nester has more leisure time. They travel more frequently, take extended vacations, and
are likely to purchase a second home in a warmer climate. They have higher disposable incomes
because of savings and investments and they have fewer expenses.
Stage V: dissolution
Dissolution of the family unit occurs with the death of one spouse. When the surviving spouse is
in good health, is working or has adequate savings, and has supportive family and friends, the
adjustment is easier. The surviving spouse often tends to follow a more economical lifestyle.
Many surviving spouses seek each other out for companionship; others enter into second
marriages.
Marketing and the traditional FLC
Traditional family life cycle concept indicated the types of products and services that a
household or family might be most interested in at each stage; it is also possible to trace how the
FLC concept impacts a single product or service over time.
Reference Group
Understanding the power & benefits of reference group
A reference group includes individuals or groups that influence our opinions, beliefs, attitudes
and behaviors. They often serve as our role models and inspiration. Marketers view reference
groups as important because they influence how consumers interpret information and make

purchasing decisions. Reference groups influence what types of products you will purchase and
which brand of product you choose.

From a marketing perspective, reference groups are groups that serve as frames of
reference for individuals in their purchase or consumption decisions.

These groups place no restriction on group size or membership nor does it require that
consumers identify with a tangible group.

Reference groups that influence general or broadly defined values or behavior are called
Normative Reference Groups (e.g. A child’s Normative Reference Group is the
immediate family).

Reference Groups that serve as benchmarks for specific or narrowly defined attitudes or
behavior are called Comparative Reference Groups (A Comparative Reference Groups
might be neighboring family whose lifestyle appears to be admirable and worthy of
imitation).
A broadened perspective on reference groups
The meaning of the reference group changed from year to year. Thus came the term Direct and
Indirect Reference Group. Indirect Reference Group consists of individuals or groups not
directly related, such as movie stars, athletes, politicians, TV, or even people who have an
attractive appearance that we met on the road - the road.
Factors that affect reference group influence

Inform or make the individual aware of a specific product or brand.

Provide the individual with the opportunity to compare his or her own thinking with the
attitudes and behavior of the group.

Influence the individual to adopt attitudes and behavior that are consistent with the norms
of the group.

Legitimize the decision to use the same products as the group
Types of reference group
Normative - Reference groups influencing broadly defined values or behavior are called
normative reference group.
Comparative – Reference group serving as benchmarks for specific or narrowly defines attitude s
or behavior are called comparative reference group

Membership – A group to which a person either belongs or would qualify for membership is
called a membership group.
Symbolic group – groups in which an individual is not likely to receive membership, despite
acting like a member by adopting the group’s value, attitude and behavior.
Friendship groups

Friendship groups are typically classified as informal groups because they are usually
unstructured and lack specific authority levels.

In terms of relative influence, after an individual’s family, his or her friends are most likely
to influence the individual’s purchase decisions.

Seeking and maintaining friendships is a basic drive of most people.

Friends fill a wide range of needs: They provide companionship, security, and
opportunities to discuss problems that an individual may be reluctant to discuss with
family members.

Marketers of products such as brand-name clothing, fine jewelry, snack foods, and
alcoholic beverages recognize the power of peer group influence and frequently depict
friendship situations in their advertisements.
Shopping groups

Two or more people who shop together, whether for food, for clothing, or simply to pass
the time, can be called a shopping group.

Such groups are often offshoots of family or friendship groups and therefore, they function
as what has been referred to as purchase pal.

The motivation for shopping with a purchase pal range from a primarily social motive to
helping reduce the risk when making an important decision.

A special type of shopping group is the in-home shopping party, which typically consists
of a group that gathers together in the same home of a friend to attend a “party” devoted
to demonstrating and evaluating a specific line of products.
Work groups

The sheer amount of time people spend at their jobs, frequently more than 35 hours per
week, provide ample opportunity for work groups to serve as a major influence on the
consumption behavior of the members.


Formal Work Group: it consists of individuals who work together as part of a team, and
thus have a sustained opportunity to influence each other’s consumption related attitudes
and actions.

Informal Work Group: it consists of people who have become friends as a result of
working for the same firm, whether or not they work together as a team, and they can
influence the consumption behavior of other members during coffee or lunch breaks or at
after-work meetings.
Virtual groups

A virtual team (also known as a geographically dispersed team or distributed team) is a
group of individuals who work across time, space and organizational boundaries with
links strengthened by webs of communication technology.

Powell, Piccoli and Ives define virtual teams in their literature review article "as groups of
geographically, organizationally and/or time dispersed workers brought together by
information and telecommunication technologies to accomplish one or more
organizational tasks.”

Ale Ebrahim, N., Ahmed, S. & Taha, Z. in their recent (2009) literature review paper,
added two key issues to definition of a virtual team “as small temporary groups of
geographically, organizationally and/ or time dispersed knowledge workers who
coordinate their work predominantly with electronic information and communication
technologies in order to accomplish one or more organization tasks”.

Members of virtual teams communicate electronically and may never meet face-to-face.

Virtual teams are made possible by a proliferation of fiber optic technology that has
significantly increased the scope of off-site communication.

Virtual teams allow companies to procure the best talent without geographical restrictions.

According to Hambley, O’Neil, & Kline (2007), "virtual teams require new ways of
working across boundaries through systems, processes, technology, and people, which
requires effective leadership...despite the widespread increase in virtual teamwork, there
has been relatively little focus on the role of virtual team leaders."
Consumer-action groups


A particular kind of consumer group-A Consumer Action Group-has emerged in response
to the consumerist movement. Today there are a large number of such groups that are
dedicated to providing consumer products in a healthy and responsible manner, and to
generally add to the overall quality.

For example, a diverse range of consumer concerns being addressed by private and public
consumer-action groups: neighborhood crime watch, youth development, forest and
wildlife concerns, children and advertising, race and ethnicity, community volunteerism,
legal assistance, public health, disaster relief, energy conservation, education, smoking,
the environment, access to telecommunications, science in the public interest, credit
counseling, privacy issues, and children and internet.
Two broad categories of Consumer Action Groups:

Those that organize to correct a specific consumer abuse and then disband (Agitation
against liquor shop in a community) .

Those that organize to address broader, more persuasive problem areas and operate over an
extended or indefinite period of time (Group against drunk driving).
Reference group appeals:
Celebrities
A celebrity is a person who has a prominent profile and commands a great degree of public
fascination and influence in day-to-day media. The term is often synonymous with wealth
(commonly denoted as a person with fame and fortune), implied with great popular appeal,
prominence in a particular field, and is easily recognized by the general public.

The Expert

A second type of reference group appeals used by marketers is the expert, a person who,
because of his or her occupation, special training, or experience, is in a unique position to
help the prospective consumer evaluate the product that the advertisement promotes.

e.g. An ad for a quality frying pan may feature the endorsement of a chef.
The Common Man

A reference group appeal that uses the testimonials of satisfied customers is known as the
common-man approach.

The advantage is that it demonstrates to prospective customers that someone just like them
uses and is satisfied with the good or service being advertised.

The common man appeal is especially effective in public health announcement (such as
antismoking or high B.P. messages), for most people seem to identify with people like
themselves when it comes to such messages.
The Executive and Employee Spokesperson

The popularity of this type of advt. probably is due to the success and publicity received
by a number of executive spokespersons.

Like celebrity spokespersons, executive spokespersons seem to be admired by the general
population because of their achievements and the status implicitly conferred on business
leaders.

e.g. Ratan Tata, K. Birla, Mukesh Ambani etc.

Trade or Spokes-Character

These are often employed as attention grabbers, acting as spokespersons to promote
children’ products.

Trade characters are intended to bond a child to a brand so that the child’s brand awareness
might form the basis of brand preference either immediately or later in life.
e.g. Animated characters used by marketers in advertisements for children product
Other Reference Group Appeals

A variety of other promotional strategies can function creatively as frames of reference for
consumers.

Respected retailers and the editorial content of selected special interest magazines can also
function as frames of reference that influence consumer attitudes and behavior.

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Module 7
Consumer Influence and Diffusion of Innovation
Opinion Leadership
Opinion leadership is leadership by an active media user who interprets the meaning of media
messages or content for lower-end media users. Typically the opinion leader is held in high
esteem by those who accept his or her opinions.
Dynamics of opinion leadership process
The Opinion Leadership process is highly dynamic in nature. Opinion Leaders communicate
informally about product and service offerings and/or brands. They offer product information
and advice, and narrate experiences. They are not generic in nature; they are specific to a product
category, and an expert in one product category would not be an expert for another product
category. Thus, a person may be an Opinion Leader for a product category and an Opinion
Receiver for another. The dynamic nature of Opinion Leadership is discussed as follows:
Opinion Leaders provide product information, advice and narrate experiences: Opinion
Leaders communicate informally about product and service offerings and/or brands; they give
product news and advice to consumers (current and potential) and also narrate their personal
experience to others. As such they act as authority figures, trend setters and local opinion leaders.
Opinion Leaders provide both positive and negative information: Opinion Leaders provide
both favorable and unfavorable information about product and service offerings and/or brands,
and this adds to their credibility. Compared to positive and neutral information and/or evaluation,
the impact of negative information and/or evaluation is much greater and has a bigger impact on
Opinion Receivers/Seekers. Thus, they would avoid such product and service offerings and/or
brands that are spoken negatively by Opinion Leaders.
Opinion Leaders are influential and persuasive: Opinion Leaders are highly influential and
very effective at persuading people around them. They are credible informal sources of product
knowledge, information and advice. People look up to them for advice and they are good at
influencing the former because of the following:
- They are regarded as subject experts, i.e. it is believed that opinion leaders are knowledgeable
and experienced about a product or service category.

- Since they receive no monetary compensation, their information, advice, opinion and
experiences about a product or service category, are perceived as genuine, objective and
unbiased.
- They are thought to have no selfish, ulterior or hidden motives, and this adds to their credibility
(unlike a marketer who wants to make a sale).
- Because they have no self-interest, their advice is regarded as being in the best interests of
others (potential and actual consumers).
Opinion Leaders are not generic in nature: They are specific to a product or service category,
and possess expertise and specialization in it. Because of the in depth knowledge they have about
the product category, people approach them for information and advice for that product or
service category.
It is important to distinguish between Opinion Leaders and Market Mavens. There are some
people who seem to know about everything and offer their advice about anything and everything.
Such people are called market mavens. They are different from Opinion Leaders in the sense that
actually they do not provide information about a product or service category. They provide
information, advice and narrate experiences of general buying and consumption behavior. They
also seem to know less intensive about a product or service category, and more extensively about
many products and services. They know more about what should be bought, how should it be
used, when it should be bought, where it would be available (retail outlets) etc. In a nutshell, they
possess more of general knowledge or market expertise.
Opinion Leaders could also become Opinion Receivers/Seekers: As explained above,
Opinion Leaders are category specific. They are experts in one product/service category, and act
as Opinion Leaders. However, when it comes to another product/service category, they may
become Opinion Receivers/Seekers. They may even seek information from people to whom they
had given information earlier about another product category. Thus, the roles may get reversed
from Opinion Leaders to Opinion Receivers/Seekers in the context of other product/service
categories.
Sometimes a person may become an Opinion Receiver/Seeker for the same product also. This is
when he is in a product-related conversation/discussion with an Opinion Receiver/Seeker who is
more informed, enlightened and updated with information product knowledge. This information

then adds to the Opinion Leaders’ knowledge database in his memory (adds to his associated
network).
Measurement of opinion leadership
In order to measure Opinion Leadership, it is essential that Opinion Leaders with respect
to the product/service category are identified. It is also important that people who have the
potential to become Opinion Leaders are also identified. There are three ways in which Opinion
Leaders can be identified; these are listed as follows:
a) Marketers directly ask the consumers whether they are Opinion Leaders.
b) They ask a subject expert to identify who the Opinion Leaders are.
c) They study the communication patterns and flows among consumers, interpret the dynamics
and identify the leaders.
i) The self-designating method: A marketing survey is conducted and people are asked a series
of questions to determine the degree to which they behave as Opinion Leaders. Questions pertain
to:
a) The extent to which they have given information and advice about a product/service category
and/or brands to others in the social system
b) How often they have been able to influence the purchase decisions about others.
c) How often they have been approached by others for information and advice about that
particular product/service category
Advantages: It is easy to include and apply in market research questionnaires. It helps measure
an individual’s perception and assessment about his/her actual Opinion Leadership and related
capacities.
Disadvantages: As the technique is based on self-assessment and evaluation, it could be to lead to
over-estimation of self and thus, suffer from bias. People could portray themselves as being
“knowledgeable and important advisors” to others when it comes to making purchase decisions.
It is also difficult to assess the outcome of the informal communication in terms of knowledge
and advice. While a person may report that he provides information and advice, and helps people
make purchase decisions, it may not be essential that the receivers may be actually using this
information and advice. Thus, success of the technique would depend on the objectivity with
which a respondent can identify, assess and report his personal influence.

The final assessment needs to be made by the marketer. The marketer must understand the
degree of relevance the Opinion Receivers/Seekers attach to the information and advice that they
receive from the various so called Opinion Leaders. This assessment would help the marketer
identify who among the many are Opinion Leaders and who are not.
ii) The sociometric method: The sociometric method of measuring Opinion Leadership basis
itself on the study of the social system, and particularly the communication patterns and flows to
identify those to give information and advice as act as Opinion Leaders. Researchers examine
complete patterns of informal information flows among consumers of a particular
product/service category, and identify those who provide information to others as Opinion
Leaders.
While the technique makes use of the analysis of the communication flow, it also uses
questionnaires that are administered to people in a social system. People in a social system are
asked to identify:
a) Those people to whom they have given information and advice about a product/service
category. In case the respondent identifies one or many people to whom he has provided
information and advice, he is regarded as an Opinion Leader. Researchers could cross-examine
by contacting and questioning the Receiver/Seekers of information and confirming from them.
b) Those people to whom they have gone for information and advice about a product or service
category and/or brand. Her again, researchers could cross-examine by contacting and questioning
the Opinion Leaders and confirming from them.
Advantages: The technique can meet tests of validity and reliability. Chances of misconception
and bias are less.
Disadvantages: It is a costly in terms of both money and time. In order to obtain results that are
valid and reliable, it requires intensive and extensive data, i.e. a large amount of information
from a large sample of respondents. This could be expensive and time consuming. The analysis
could also be complex and would require experts in the area.
iii) The key informant method: Based on careful observation and analysis of social
communication, key informants in a social system are identified. These key informants are asked
to identify and/or designate individuals in the social group who are Opinion Leaders or who are
most likely to be Opinion Leaders.

The key informants are those who are aware about the communication patterns in a social
environment and able to provide a fair and impartial assessment of these patterns. They may or
may not be a member of such group(s); they may be active participants or passive observers. In
this way (where an expert is asked to identify Opinion Leaders), the technique is better than the
self-designating method (where a person is asked to assess himself as an Opinion Leader).
Advantages: This is relatively less expensive and time consuming, as compared to the
sociometric method. The study is based on a chosen few rather than large samples in the self-
designating and sociometric methods.
Disadvantages: If informants are not carefully chosen, they may provide wrong information.
iv) The objective method: The objective method is based on simulation. It identifies and
measures Opinion Leadership by placing people in controlled environments (just as controlled
experiments). People are chosen, given information about new products and service categories,
and the asked to act out as Opinion Leaders. The resulting “web” and “patterns” of informal
interpersonal communication regarding the relevant product or service category are traced and
analyzed. The technique thus measures the results of their efforts and assesses how successful
their impact is on consumption behavior.
Advantages: It measures people’s abilities to provide news and advice and influence purchase
decisions in controlled environments.
Disadvantages: It is time consuming as it requires setting up of experimental designs. It is a
complex process and requires subject experts and trained psychologists.
Market Mavens
Individuals whose influence stems from a general knowledge or market expertise that leads to an
early awareness of new products and services.
Opinion leadership & marketing strategy

Identify and provide samples to opinion leaders

Design programs to stimulate opinion leadership

Develop ads simulating opinion leadership

Create opinion leaders

Control negative word-of-mouth communication
Creation of opinion leadership

1. They may use conversation as a dissonance reducing process for products for products they
have bought.
2. They may want to influence a friend or neighbor
3. They want to be self-involved, when they may want to confirm their own judgments.
Diffusion of Innovation
• Diffusion process- macro process spread of a new product to consuming public
• Adoption process-stages through which the consumer passes while making the purchase
decision.
• Consumer innovator categories.
E.g. Gillette 40 % of the sales must come fm new pdts introduced in last 5 yrs.
HP revenues are derived fm the pdts introduced in last 24 mths.
Diffusion Process
The process by which the acceptance of an innovation is spread by communication to members
of social system over a period of time.
Marketer generated info’n sources.
Websites, chat room. e.g i-pod
“Diffusion” is defined as a macro process that deals with the spread of a new product or service
Offering amongst the potential market; it relates to the acceptance/rejection of an innovation by
the segment(s). “Diffusion of Innovation” is defined as a process by which an innovation spreads
amongst and gets the absorbed/accepted or assimilated by the market.
Schiffman defines “diffusion”, as “the process by which the acceptance of an innovation (a new
product, new service, new idea, or new practice) is spread by communication (mass media,
salespeople, or informal conversations) to members of a social system (a target market) over a
period of time”. The definition comprises four basic elements of the diffusion process:
- Innovation: the term “innovation” refers to the newness of the product/service offering.
- Channels of communication: this includes i) Marketing communication that takes place
between the marketer and the potential market, or the target segment; it could be personal
(salesperson and consumer) or impersonal (via print or audio visual media).

ii) Interpersonal communication that takes place between the consumers themselves or within
members of the target segment(s); it could be word of mouth communication within consumers
or through an opinion leader.
- Social system: this refers to the social setting in which the diffusion takes place; it actually
refers to the market segment(s) or the target market(s). The definition and scope of the social
system depends on the product and service in question, its usefulness and its very basis for
existence. In a way, it reflects the target market(s) for whom the product and service is designed,
and within what segment(s), it would be diffused. For example, for a new herbal anti-wrinkle
cream, the social system would be confined to ladies who are in their late 40s. The social system
has wide repercussions on the diffusion of a product/service:
i) First, the new product and service is discussed and or evaluated within members of the social
system through interpersonal communication, opinion leadership and word-of-mouth.
ii) Second, the philosophy and the resultant orientation, with respect to culture, traditions, values
and norms also impacts the diffusion process. Thus, the social system impacts the ultimate
adoption and assimilation of the innovative offering; in order to be accepted quickly and
penetrate successfully, the marketer needs to keep this social system in mind and design his
product and the marketing mix accordingly.
- Time: time is an important factor in the diffusion of innovation, as it determines the pace of
adoption and resultant assimilation of the innovative offering; researchers have studied the
impact of time in the following ways:
i) The amount of purchase time: the amount of purchase time refers to the average time that a
consumer would take to adopt a new product and service offering; this would include the total
time between the consumers’ initial awareness to the final acceptance/rejection of the new
product or service. Time as a factor has relevance for the diffusion process in the sense that it
helps assess the total time that it would take for a new product or service offering to get totally
diffused and adopted by the market at large; when the average purchase time is less, it can be
assumed that the rate of diffusion would be faster.
ADOPTION PROCESS:
The second major process in Diffusion of Innovation is “Adoption”. Adoption is a micro concept

that lays emphasis on the various phases or stages through an individual consumer passes while
accepting/rejecting a new product or service offering. The study of adoption is important for a
marketer in the sense that it helps him understand the various stages through which a consumer
passes right from his initial awareness to the final acceptance/rejection. It may so happen that the
innovative offering may be existing for long in the market, but the consumer is unaware of it; or,
it may have existed in the market for long, but is regarded as “new” because the consumer has
heard of it for the first time. This implies that consumers could differ in the manner they
complete their purchase activity, right from initial awareness to the final act of purchase. This
could mean that the marketer needs to design his selling strategy accordingly. Schiffman defines
adoption as “the stages through which an individual consumer passes while arriving at a decision
to try or not to try or to continue using or to discontinue using a new product”.
Consumer researchers have proposed a number of models to describe the steps in the adoption
process, viz., Heirarchy of Effects’ Model, Robertson’s model, and Roger’s model The models
explain the stages through which a prospect passes to end up being a consumer, right from the
stage of initial awareness to final adoption. Generally speaking, the consumer passes through
five stages of adoption, viz., awareness, interest, evaluation, trial, and adoption (or rejection).
The assumption underlying this general model of adoption is that when a new product/service is
introduced, prospects go through an information search which could range between limited to
extensive; of course, for some products this search is highly limited (routine purchases).
The five stages are explained below:
i) Awareness: This is the first stage in the adoption process, where the consumer is exposed to
the new product/service offering, and gets to know of the product. The marketers’ objective here
is to provide some awareness about the innovation, the features and benefits as also the brand.
The consumer is generally passive and acts as a mere recipient of information. He becomes
aware but lacks sufficient knowledge about the new offering.
ii) Interest: In this next stage, the consumer begins to develop some interest in the innovative
offering, and thereby puts in some effort to know more about it. The consumer becomes active in
his search for information and tries to elaborate on the information received at the awareness
stage. He actively searches for information about the new product /service and tries to assess
how it can benefit him.

iii) Evaluation: The consumer who has acquired knowledge about the innovation, now begins to
evaluate; he evaluates whether, i) more information search is necessary with respect to the
innovation as well as to the brand; ii) he is sufficient with the product/service information that he
possesses. The consumer also evaluates the innovative offering in terms of the attributes,
features, and overall benefits, as compared to existing alternatives; he assess the “value” of the
product/service offering and the brand. If he feels that the offering provides “value”, he goes in
for the next stage which is trial; else the process is aborted, and the innovation rejected.
iv) Trial: The consumer goes and tries out the innovative offering, but there is not yet any further
purchase (repurchase) commitment. The product/service is experienced on a small scale and used
on a limited basis only, to determine the worth or usefulness.
v) Adoption (Rejection): Based on the trial stage, and the resultant experience, the consumer
would decide to decision to use/reuse/patronize the offering. If the experience is satisfying, and
the evaluation favorable, the innovative offering would be accepted, else it would be rejected.
While this five staged procedure constitutes a general model of adoption of innovation, it has
been criticized to be very general that lacks the complexities of real life buying and consumption.
Researchers argue that:
- The model does not indicate a need recognition stage or a problem solving scenario; critics
argue that when faced with a problem, the prospect’s approach towards an innovative offering
would be much different, than when he is not faced with one.
- Evaluation takes place both before and during trial; in fact it takes place throughout the process.
- Trial is no guarantee for future purchase or repurchase; although experience may be
satisfactory, a consumer may never use the product/service offering again.
- The model makes no mention of post purchase behavior; it does not speak of cognitive
dissonance, neither does it speak of post purchase evaluation leading to a commitment to
use/reuse/patronize the offering in future.
Thus, keeping in view these realities, the model has been modified, and consumer researchers
have incorporated two more stages between trial and adoption, viz., direct product experience
(consequences), and product evaluation (confirmation). Direct product experience refers to
experience with the product/service offering on a longer duration; so as to experience its
consequences and to assess it better. Product evaluation refers to assessing the consequences of

the experience so as to accept the innovation or reject it after modification, the stages of the
model stand as Awareness, Interest, Evaluation, Trial, Direct product experience, Product
evaluation, and Adoption.
Adopter categories: This refers to a classification scheme amongst members’ of the target
segment(s), which illustrates where one consumer stands in relation to another consumer with
respect to time, that has lapsed between the introduction of the new product and service and the
adoption by a consumer(s). Researchers have classified consumers into adopter and non-adopter
categories, which range from two or three or five category classifications. It is noteworthy that
the consumers would be classified based on the nature of the good or service.
Roger’s has proposed a classification of adopters, according to which consumers can be divided
into five categories based on the time taken by them to adopt a product. These five adopter
categories are innovators, early adopters, early majority, late majority, and laggards. Based on
research, it has been observed that the five categories when plotted on a graph, lead to a bell-
shaped normal distribution curve. The five categories are explained as follows:
a) Innovators: Innovators comprise 2.5 percent of the target market(s) adopters; they are those
consumers’ who are the first to go and purchase a new product or service offering. They purchase
the new product and service offering not because they possess a need, but because they desire
new ideas and concepts, and seek product and service innovations. They are high on self-
confidence, and are always eager to try out new products/services. They have access to
information about such new offerings, and are quick to purchase; one, because they have the
interest and inclination to buy the “new”; and two, because they have the purchasing power and
the access. It is important to mention here, that innovators are not “generic”; they are in most
cases “specific” to a product and service type.
b) Early adopters: The next 13.5 percent of the target market(s) adopters are called early
adopters. These are those consumers’ who purchase the new product and service offering not
because they are fascinated towards the “new”, but because they possess a need. They generally
tend to have some idea on the product/service category, and after gathering some more
information about the product and or brand, they go in for purchase. Early adopters rely on group
norms and also turn out to be good opinion leaders, and could be easy targets for the marketer.

c) Early majority: The early majority is similar to the early adopter in the sense that they buy the
product/service offering because they possess a need and want to fulfill it; however, they are not
as quick as the early adopters and take longer to enter into purchase. This is because unlike the
earlier two categories, the early majority does not have much interest in the product/service
category. Thus, the consumers that fall into this category have to collect information, evaluate it,
deliberate carefully and then take a decision; thus, the process takes longer. The early majority
make up the next 34 percent of the adopters.
d) Late majority: The next 34 percent of the adopters are referred to as the late majority. They are
referred to as “late,” because i) members of their social class, reference group and peer group
have already made the purchase; and the social influence is strong, and ii) they themselves have
evaluated the new product and or service and are ready to buy it. They have a need, and after
careful thought and deliberation as well as with social influence and pressure, the “late majority”
makes the purchase. By nature they are skeptical and confirm to social pressure. Interpersonal
communication has a major role to play.
e) Laggards: The laggards are the last to adopt a new product or service offering, and as such
make up the last 16 percent of the target market. They are slow in buying the innovative offering
because, i) they are uninvolved with the product and service; ii) they do not possess much
information; iii) they remain uninfluenced by social pressure, and social ties are not very strong;
iv) they believe in making routine purchases and prefer to buy the “familiar”, than the
“unfamiliar”.
Post purchase process

After the purchase, the consumer might experience dissonance about their purchase and be alert
to information that supports their decision.
Marketing communications should supply beliefs and evaluations that reinforce the consumer’s
choice and help him or her feel good about the brand.
Marketers must monitor post-purchase satisfaction and post-purchase actions.
Customer satisfaction and customer commitment

Satisfaction is a function of the closeness between expectations and the product’s perceived
performance.
- If performance fall short of expectations the consumer is disappointed.
- If the performance meets expectations the consumer is satisfied.
- If the performance exceeds expectations the consumer is delighted.
-Consumer form their expectations on the basis of messages received from sellers, friends, and
other information sources.
-The importance of post-purchase satisfaction suggests that a product claim must truthfully
represent the product’s likely performance.

Satisfaction or dissatisfaction with the product will influence subsequent behavior.

A dissatisfied consumer may abandon or return the product.
Post purchase dissonance
This is a common consumer reaction after making a difficult, relatively permanent decision.
Doubt or Anxiety – referred as - post-purchase dissonance.
The probability of a consumer experiencing post-purchase dissonance, as well as the magnitude
of such dissonance, is a function of:

Degree of commitment/irrevocability of the decision: if it is easier for the consumer to
change the decision, it is less likely that the consumer will experience dissonance

Importance of decision to customer: it the consumer views the decision as more important,
it is likely to cause dissonance.

Difficulty of choosing among the alternatives: if the consumer experiences difficulty in
choosing from among the alternatives because of their number, the number of relevant
attributes associated with each alternative and the extent to which each alternative offers
attributes not available with other alternatives; the consumer will experience dissonance
of greater magnitude.

Individual’s tendency to experience anxiety: The personality of some individuals is such
that they have a greater tendency to experience anxiety. If the consumer is more prone to
experiencing anxiety, it is more likely that she/he would experience post-purchase
dissonance.
Product use and non-use
Product Use
• Product purchase is normally followed by product use (though not always).
• Consumers use products to fulfill needs - it is not the purchase which generally fulfills the
need, but the product use.
• It is of importance to know how the customer uses a product..
• Satisfaction = Benefits - expectations
• To increase satisfaction, it is imperative that consumers receive maximum possible
benefits.
• Need for consumers to use a product so that

Actual usage = ideal usage (to yield maximum level of benefits)

• To determine this, we need monitoring.
Monitoring Product Use
• Monitoring can indicate:
– New uses for existing products.
– Needed product modifications.
– Appropriate advertising themes.
Opportunities for new products
Product Non-Use
• Product non-use can be a significant problem in some categories.
• Non-use can indicate:
– the perception that the utility of the product has changed.
– situational influences have not been favorable for product use (need to expand
acceptable range of situations)
Disposition
Disposition of the product or the products’ container may occur before, during, or after product
use. No disposition involved, in case product is completely consumed (ice cream).
Product disposition

Recycling

product

package

Trade-ins

to motivate replacement

Second hand markets

e.g. textbooks

clothes

Cash Converters

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Consumer Behaviour 14MBAMM301

DEPARTMENT OF MBA, RIT 1

Motivation Theories and Marketing Strategy - Maslow’s Hierarchy of Needs, McGuire’s

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Module 5: (07 Hours)

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Sl.No Module Page No.

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Nature & Characteristics of Indian Consumer

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 Shortage of consumer products; inflation of early 1970's

 Increasing consumer, expectations because of consumer education Influence of the

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3. Economic advantages to a large segment of the population (middle- and upper-class).

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 Quantitative research design

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Consumer research process

Data collection methods

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the consumer distorts the information received so as to fit his/her established

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Engel, Blackwell and Kollat’s Model: Engel-Blackwell-Miniard Model of Consumer

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Product/Service Situations Attitude

D Cold Total Running Nose I’ve got an important meeting in 2hrs….

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Spice Jet Family wedding My cousin is getting married and I want to be

 The transmission of a message from a sender to a receiver via a medium of

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I. Need recognition / Problem recognition:

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o 4. Need of esteem (for oneself and from the others)

II. Information search

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Four views of consumer decision making

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The Disposition situation

 Music influences consumers’ moods, and in turn, influences a variety of consumption

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 Most consumers find feelings of crowding to be unpleasant resulting in:

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