MS- 61: CONSUMER BEHAVIOUR

ASSIGNMENT

Course Code : MS-61

Course Title : Consumer Behavior
Assignment Code : 61/TMA/SEM-I/2011
Coverage : All Blocks

Note : Answer all the questions and send them to the Coordinator of the Study Centre you are
attached with.

1.Assume that you are the marketing manager of the online banking division of the
country’s leading bank . How would you utilize your understanding of consumer behavior
to effectively segment your markets and identify appropriate segments for promoting
online banking ? Also describe the promotional strategies you will develop for the segments
identified by you.

Consumer behaviour is very complex phenomenon, which is considered primarily in marketing

decisions. It has been rightly said "Understand, you do not understand, you will not understand,
you cannot understand all your customers but still you have to do your best to understand them."
In consumer behavour this is very difficult to make a uniform theory that may suggest that a
particular individual or group will behave in a particular manner. Consumer behavior is dynamic
and to be studied regularly. Increasing awareness, living standards and urbanization has led to
increase in the changing preferences and the same has forced the marketers to change their
product features, packaging styles, distribution channels and so on. There is a famous saying the
"Success has a simple formula-Do your best and people must like it". Similarly, for marketers the
advice is- offer the best and customers must like it'. Identical products always have their life
cycle the product life cycle suggests that there is a level of maturity of the product and after that
no more consumers can be attracted for that. The case is very same with preferences of
consumers that they always like some innovative and different products to use. The study of
consumer behavior is compulsory to know about likes and dislikes of consumers from time to
time so that the products and services can be offered accordingly. Customers have their own
unique needs, demands and preferences in a particular segment. Marketers have to study
customers in particular segment. Really interesting it is, the study of consumer behavior can
make it possible that after observing and examining the behavior of consumer a marketer can
present his product in such a way that the product can capture the market. However it was very

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difficult to sell that product earlier. Consumer behavior indeed gives every possible answer to the
complex questions concerned with consumer's buying reasons.

BANKING SERVICE

These all are essential decisions which are concerned are essential ingredients of services
marketing mix. The analysis has been done in the context of banking services.
PRODUCT
-features of service offering like different formsof deposits and loans as per customer
requirements.
PRICE
-interest charges,discounts,fees,and commission must be competitive.
PLACE
-branches,ATMs,mobile banking,internet banking,for affordability, quality and conveniences
etc
PROMOTIONS
-mass media is considered best for the banks—followed by personal selling and direct
marketing.
PEOPLE
-bank employees behavior is a significant factor in the service quality of the banks, which
is considered a prime factor in the bank selection criteria.
PROCESS
-the process of transaction contains time, accuracy and convenience. Customer must feel
delighted after getting a transaction processed.

PHYSICAL EVIDENCE

-physical evidence is a highly rational part of a banking service . these are to attract
potential customers towards banks and retain the existing customers.
Banks are providing innovative services with innovates styles. ATMs, Credit cards and Internet
banking have changed the quality of delivery of services of banks. Banking services are growing
with many new additions such as money transfers, Bankassurance, NRI services and so on.
Promotion of service has been a challenging task. Banking services being of a sophisticated
nature should be promoted carefully, clearly and innovatively.

consumer behaviour is the base of all marketing activities and promotional strategies are also the
part of marketing so they are also designed by considering all the aspects of consumer's
behaviour.
Service quality is not one-dimensional; it encompasses numerous factors that are important to
customer satisfaction. Satisfaction basically is related to expectations and perceived delivery on
these dimensions and as shown by the equation given below. The quality of service delivery
results in customer satisfaction & their retention as it reinforces the perception that the value of
the service received is grater than the price paid for it. Quality is defined as the ability of the
service provider to satisfy customer needs. Customer perception , service quality & profitability
are interdependent variable. Even in the case of products, quality is difficult to define because it
is highly dependent upon customer perception. The task is made more complicated in the case of
service because of the intengible nature of service & the variation in services offered to different
customers.

There are several reasons why customers must be given quality service. Most important of them
are

1. Industry has become so competitive that customers now have variety of alternatives. If the
customers are lost, it can be extremely difficult to win back the individual.

2. Most customers do not complain when they experience problems, these customers simply opt
out & take their business elsewhere.
What is CUSTOMER Satisfaction?
CUSTOMER Satisfaction = function of {CUSTOMER -Expectation and Perceived delivery}
A person is said to be dissatisfied when the perceived delivery is lower than expectation; he/she
is satisfied when they match; delighted when the delivery exceeds expectation and astonished
when the delivery far exceeds expectation. The following equations explain these relationships.
Perceived Delivery < Expectation --> Dissatisfaction
Perceived Delivery = Expectation --> Satisfaction
Perceived Delivery > Expectation --> Delight
Perceived Delivery >> Expectation --> Astonishment
Dimensions of Service Quality:
There are various aspects that a customer expects from different services.

1. Reliability: This refers to the ability of the company to perform the promised service
dependably and accurately. Reliability is probably the single most important dimension of
quality. Customers expect that companies will do what they say and they will do when they say
they will do it.

2. Tangibles: This refers to the appearance of the physical facilities, equipment, personnel, and
communication materials. As services are intangible, the tangibles give an impression to the
customers about the quality of service they can expect from a firm. A bank in a shabby building

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will make the customer wonder whether their money will be safe in such a bank.

3. Responsiveness: This refers to the willingness of the employees to help customers and provide
prompt service. When you go to a bank the minimum that you expect is that the employees
would attend to you rather than chit-chat amongst themselves.

4. Assurance: This factor is linked to several minor factors such as competence, courtesy,
credibility and security. Competence depends on the service provider's possession of the required
skills and knowledge to perform the service. The politeness, respect, consideration, and
friendliness of the service providers can be bundled into the term courtesy. Credibility refers to
the perceived trustworthiness, believability, and honesty of the service provider. Security refers
to the fact that the service should be free from danger, risk, and doubt. In sum, the assurance
factor refers to the knowledge and courtesy of employees and their ability to inspire trust and
confidence.

5. Empathy: Empathy refers to the caring, individualized attention the firm provides to its
customers. It includes access, communication and understanding. Access refers to the
approachability and ease with which the customer can contact the firm. Communication refers to
keeping the customer informed in the language they can understand and listening to them.
Understanding has to do with the efforts made by the service provider to know customers and
their needs.

THE MARKET SEGMENTATION VARIABLES CONSIDERED FOR THE

BUSINESSES.

-reduction in capital expenses.

-reduction in operation expenses.
-reduction in maintenance expenses.
-improvement in the cash flow.
-improvement in the working conditions for field employees.
-improvement in the productivity of field employees.
-improvement in the business market coverage
-improvement in the business results.

FOR THE INDIVIDUALS

1.Demographic variables
*age
*gender Male and Female
*sexual orientation
*family size
*family life cycle
*Education Primary, High School, Secondary, College, Universities.
*income
*occupation
*education

2. socioeconomic status
*religion
*REGIONAL FOCUS
*language

3. Geographic variables
*region of the country,NORTH / SOUTH/ EAST/ WEST/CENTRAL etc.
*metro/ rural : Metropolitan Cities, small cities, towns.
*Density of Area Urban, Semi-urban, Rural.
*climate Hot, Cold, Humid, Rainy.

4.Psychographic variables
*personality
*life style
*value
*attitude

5.Behavioural variables
*benefit sought
*product usage rate
*brand loyalty
*product end use
*readiness-to-buy stage
*decision making unit
*profitability
*income status

1.Generation X consumers
Functionality;
Here's how to market to Gen Xers:
• Appeal to their sense of fun and creativity.
• Include lots of visuals, headlines quotes, etc. in print materials (See Wired Magazine for
examples)
• Communicate directly and openly. They'll see through anything else.
• Use their language. Either it "rules" or it "sucks."

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• Demonstrate how your product or service can educate them. Gen Xers love learning.
• Offer a variety of times for events. Keep in mind that unlike preceding generations, this one has
a life.
• Schedule business events in the daytime.

2. Affluent baby boomers

Here's how to market to AFFLUENT BABY BOOMERS:
Functionality;
*Connect with boomers’ sense of themselves as trailblazers.
*Focus on their lives, not their ages.
*Link your brand with a major life event.
*Relate to the generation’s penchant for self-improvement through self-exploration.
*Fulfill boomers’ constant need for more.
*Realize that well-being has many meanings.
*Think solutions, not problems.
*Don’t assume that all boomers are the same.
*Recognize their need for indulgence.

3. BUSINESS EXECUTIVES
*SEGMENT----- middle class.
*TARGET----upper income brack [ 400,000 ----1mill rupees]
*POSITIONING -----affordable / CONVENIENT.

4. INDIVIDUAL / MIDDLE CLASS FAMILIES.

*SEGMENT-middle class
*TARGET - FAMILIES with median income.
*POSITIONING ----entertainment for all situations.

Mass Media Advertising: Most Preferred mode for marketing of Banking Services
Mass media advertising includes TV commercials and advertising in national level newspapers
which have a wide coverage. Advertising in these has made maximum people aware about the
offerings of the banks and established most of the bank names as big brands. In a recent survey
ICICI Bank has been considered as the most popular banks in private sector. The use of umbrella
branding works well in promotion of banking services. Different types of advertisement
campaigns have been seen in form of TV commercials and as print ad in newspapers. Print ads
mainly focus on corporate image advertising of banks as well as a new offering of the bank such
as increase in interest rate on deposits or decrease in the interest rates in loans and so on. TV
commercials mainly focused on corporate advertising, where banking service is promoted as a
whole rather than a particular product of banks.
Themes and appeals used in TV commercials of banking:

Advertising appeal is the method used to draw the attention of consumers and to influence their
feelings toward the product, service, or cause. There are hundreds of different appeals that can be
used as the foundation for advertising messages. These are the central idea of an ad which has
been used to catch the attraction of customer by heart. The theme of a commercial strikes a
person in depth and forces him/her to act in the desired manner. Generally advertising appeals
are broken into two categories: rational appeals and emotional appeals.

USE OF APPEALS IN BANKING MARKETING

1.EMOTIONAL APPEAL.

A.SOCIAL AFFECTIONS>>>SECURITY AND FUTURE BENEFITS.

B.PERSONAL AFFECTIONS>>>DIFFERENTIATION

2.RATIONAL APPEAL
A.PRACTICAL >>> CUSTOMIZATION OF SERVICE OFFERS
B.PRACTICAL >>>COMPREHENSIVENESS OF SERVICE OFFERS
3.EMOTIONS
PERSONAL /RELIABLE SECURITY >>> SUPPORT CUSTOMERS

Sales promotional has become popular due to the popularity of the usage of debit and credit
cards. The offers are also given to the customers for registering and transacting with internet
banking.

In present time the most popular tool for promotion of banking services has become Internet
Marketing of services. E-Advertising is being very much popular. In city areas of India, people
use internet so frequently. Studies tell that they use internet mostly for checking their mails,
finding results and educations and research purposes. The e-advertising of banking services not
only promote the services by giving offers but it also interacts with the person and a potential
customer can purchase the product with the help of this. However internet advertising in pop ups
irritates the internet users but advertisements done on home page of any website such as email
service provider is useful and customers get knowledge about the new banking services and
promotions. When they see something in front of their eyes they can remember it much.

2.Develop an appropriate question naire to measure consumer attitudes towards any two of

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the following, based on what you have studied about attitudes and attitude measurement:
A. Health clubs
B. Diet Colas
C. Mutual funds

Consumer, Usage and Attitudes (CUAS)

"Consumer, Usage and Attitudes" is a type of market study that contemplates many aspects
associated with a product or service, as well as external aspects that may influence the
consumer's perception.
What information are you looking for?

1. Consumer habits
When do you consume?
Where do you consume?
Why do you consume that product?
How do you consume?
Who do you consume with?
What are the options of use?
Where do you buy?
How much do you buy?
When do you buy?

2. Knowledge and recall of the service or product

Top of Mind
Total spontaneous recall
Aided recall
Distribution knowledge
Advertising recall

3. Attitudes towards the product or service

General perception
Satisfaction level
Product loyalty
Aspects you liked
Aspects you disliked
Aspects to be improved

This study allows statistical cross checks by gender, age, and educational and socioeconomic
level, among others. In those cases where similar studies from previous years exist, it allows
comparisons in order to track trends over time.

It also allows a clear and objective appraisal of the current status of a particular product or
service, as well as an evaluation of what comparative advantages it has over the competition. The
study can also detect problems that could be important for the brand in the medium term (1-3
years).

It allows the researcher to know if the advertising product and presentation meet all of the
customer's expectations or if shortcoming(s) exist.
DIET COLAS

Q1. Do you drink diet colas?

Yes /No
Q2. Which brand of diet colas do you prefer?

Q3.Do you like the Color of the diet colas.

Q4.Do you like the Shape of the bottle.

Q5. Are you satisfied with the Quantity

Que6. How much are you satisfied with the following factors in your preferred Diet colas?
(Tick in the desired column) Very Satisfied/ Satisfied /Normal/ Least Satisfied /Can’t Say

FACTORS
-Flavor/taste
-Price
-Quality
-Packaging
-Form
-Brand
-Image
-Color
-Shape
-Quantity

Que7. Which form of a DIET COLAS do you like?

Hard

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MEDIUM
SOFT
STRONG
Que8. What pack do you purchase?
Small /Big /Family Pack

Que9. Which promotional offers attract you most?

-Free gifts
-Price Offer
-Any other

Que10.Which of these factors affect your purchase?

-Advertisement
-Suggestion from friends and relatives
-Attractive Display
-Doctors Advice
-Brand Ambassadors

-Ingredients

Q11. Which media of advertisement influence your purchase?

-Television
-Newspapers
-Brochures
-Hoarding
-Display

Q12. How frequently do you purchase DIET COLAS?

-Once in a fortnight
-Daily
-Weekly
-Monthly
-Quarterly

Q13. What according to you is the reasonable price of DIET COLAS?

Below5
5-10
10-20
20.30
Above 30
Q14. If your preferred brand is not available for repeat purchase then what will you do?
-Postpone your purchase
-Switch over to other brand
-Go to the other shop to search for your preferred brand

Q15. If another brand of the same product appears in the market, will you prefer to stop
-buying this brand and buy the new brand?
-No, not at all
-I may consider
-No, I shall not
-can’t say

Q16. If you don’t like to change to the new brand, then what are the reasons for
-continuing to purchase the old brand?

PERSONAL DETAILS
Name:
Address:
Age:
Between 0-10
Between10-20
Between 20-30
Above 30

Gender:
Phone Number:
Marital status:
Education:
Profession:
THANKS

HEALTH CLUBS

1.Consumer habits
a.are you a member of health club.
b.how long have you been a member
c.When did you join?
d.Where is the club?
e.Why did you join the health club?
f.How often do you visit the club in a week?

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g.with Whom do you visit the health club ?
h.What are the options of use?
i.Where do you buy the membership?
j.How much did you pay monthly?

2. Knowledge and recall of the service or product

a.Top of Mind—name of the health club
b.Total spontaneous recall—other health clubs
c.Aided recall------have you seen this advertisement
d.Distribution knowledge---where else have you seen the advertisement.
e.Advertising recall-------------can you recall the radio advertising.

3. Attitudes towards the product or service

a.General perception---how will you describe this health club.
b.Satisfaction level---how satisfied are you with this health club.
c.Product loyalty---how loyal are you to this health club.
d.Aspects you liked—what aspects you admire at this health club.
e.Aspects you disliked—you don’t enjoy at this health club.
f.Aspects to be improved—aspects you would like to change to make it more acceptable.

3.Why in your view, does reference to influence tend to vary across product categories?
Identify any two products where the reference group influence is :
c. Strong for product choice but weak for brand choice
d. Strong for both Product choice and Brand choice

Explain the reasons for this pattern of reference group influence

A reference group is defined as “an actual or imaginary individual or group conceived of having
significant relevance upon an individual’s evaluations, aspirations, or behavior”. A reference
group IS ALSO a person or group of persons that significantly influence the behavior of an
individual, and argue that the Reference Group concept provides a way to comprehend why
many individuals do not behave like others in their social group. Reference groups are usually
conformed by the social network of an individual: family members, friends and colleagues, and
inspirational figures , and can be a source of brand associations that mold the mental
representations a consumer has of himself . Given that social networks are conformed in different
manners in different cultural contexts, reference group influence varies across cultures .
Furthermore, reference groups have been identified as important determinants of public service
consumption .

Reference groups have basically two functions :

a normative function that sets and enforces standards for the individual, and
a comparative function that serves as a comparison point against which an individual evaluates
himself and others . There are three dimensions of reference groups:
1.informational, 2.utilitarian, and 3.value-expressive.
1.Informational influence occurs when, facing uncertainty, an individual searches for information
and counts on sources with high credibility or high experience in order to help him make a
decision;
2.utilitarian influence occurs when an individual acts according to the desires of others that are
important to him in order to obtain a reward or to avoid some punishment; and
3.value-expressive influence is characterized by the individual’s acceptance of certain external
standpoints given his psychological need to associate with a person or group.

STRONG PRODUCT CHOICE BUT WEAK BRAND CHOICE.

1.LAPTOP COMPUTERS
The purchase is influenced by
1.informational INFLUENCE
as the individual has limited information / knowledge about
the product/ brands and seeks high credible information support
to make the decision

2.MOBILE PHONE
The purchase is influenced by
3.value-expressive INFLUENCE
as the needs acceptance of certain external standpoints given his
psychological need to associate with a friend or group.
STRONG PRODUCT/ BRAND CHOICE

1. .LCD TV
The purchase is influenced by
1.informational INFLUENCE
as the individual has limited information / knowledge about
the product/ brands and seeks high credible information support
to make the decision
and also by
3.value-expressive INFLUENCE
as the needs acceptance of certain external standpoints given his

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psychological need to associate with a friend or group.

2. LIFE INSURANCE
The purchase is influenced by
2.utilitarian INFLUENCE
as individual acts according to the desires of the family members and
also for the benefits of his/her future requirements.

4.From among the purchases made by you or your family in the last few years identify any
three purchases that required a large degree of pre purchase search for information.
Clearly explain what characteristics of the product or the buying situation made this
search behavior necessary.

EXTENDED PROBLEM SOLVING

3 PRODUCTS

Automobiles / COMPUTERS/ HOLIDAY HOMES

1 Roles and Family Influences--

-father and senior children make the decision.
-mother supports their decision.
-family roles and preferences are the model for children's future family (can reject/alter/etc)
-family buying decisions are a mixture of family interactions and individual decision making
-family acts an interpreter of social and cultural values for the individual.

Problem Recognition --do the consumers have a need.

Information search-- where will the information will be available.
Purchase decision--Choose buying alternative, includes product, package, store, method of
purchase etc.
Purchase--product availability.
Personal risk
Social risk
Economic risk
Extensive Decision Making
Personal
Psychological factors
Psychological factors include:
1 Motives--
2 Perception--
3 Ability and Knowledge--
4 Attitudes--
5 Personality--
6 Lifestyles--
7 Social Factors
8 Opinion leaders--
9 Roles and Family Influences--
10 Reference Groups--
11 Social Class--
12 Culture and Sub-culture--

To the extent that a consumer cannot always be certain that all of his or her buying goals will be
achieved, risk is perceived to be a factor in most purchase decisions. In fact, much of the work
on risk taking indicates the perceived risk is little more than unresolved tension due to opposing
vectors or forces. Risk emerges from any of the following factors :
(1) Uncertainty as to buying goals

(2) Which of several purchases (product, brand, model, etc.) best matches the buying goals

(3) Possible adverse consequences if the purchase is made (or not made)
The concept of perceived risk often used by consumer researchers defines risk in terms of the
consumer's perceptions of the uncertainty and adverse consequences of buying a product (or
service) . In this study, perceived risk is defined as comprising the following components:
financial, psychological, performance, time, social, and time-related risk . Consumers are
credited with the capacity to receive and handle considerable quantities of information and
undertake extensive pre-purchase searches and evaluations. In particular, the present project
investigates the perceived risks associated directly with pre-purchase information: performance
risk, financial risk, psychological risk, and time risk. These may be present in any combination
and in different degrees for any given purchase .
(1) Performance risk is defined as the loss incurred when a brand or product does not perform as
expected . Performance risk occurs when the product chosen might not perform as desired and

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thus not deliver the benefits promised. This integrates the future quality of the product to the
point of purchase.

(2) Financial risk is defined as a net financial loss to a customer, including the possibility that the
product may need to be repaired, replaced or the purchase price refunded . This is an extension
into the future (future dollar costs) of the perceived price paid at the point of purchase (current
dollar cost). Where the loss of money is an important consideration, financial risk is said to be
high.

(3) Psychological risk broadly describes instances where product consumption may harm the
consumer's self-esteem or perceptions of self. In this study, psychological risk perception is
defined as the experience of anxiety or psychological discomfort arising from anticipated
postbehavioral affective reactions such as worry and regret from purchasing and using the
product : for example, protecting privacy according to individual information exposure.

(4) Time risk results when the passage of time reduces the ability of the product to satisfy wants,
such as when a product rapidly becomes obsolete . In this study, the perceived cost with respect
to customers' information search activities was used as a type of operational definition.
The amount of risk consumers perceive is a function of many variables, and consumer have
many remedies when it comes to reducing the amount of risk they perceive associated with
product purchase on the web. Search activity is entered into with the intent of lowering the
person's overall perceived risk level. The nature of the search activities undertaken (and thus the
amount of search) is a function of the person's acceptable risk level, the levels of the two
components of perceived risk, the costs and benefits of the specific available risk-reduction
activities, and the ability of the person to suffer a loss .

Definition of Pre-Purchase Information

Pre-purchase information will be defined as a series of data processed according to consumer-

specific purposes. Consumers have special characteristics that recognize optimal information
from resources and consumers act depending on their own given situation . In particular, the
ability to collect product information and make comparisons between the different product
offerings from different providers—possibly across national and currency boundaries—is often
viewed as one of the main competitive challenges of e-shopping. To enhance consumer pre-
purchase information processing, companies offer other information sources to consumers have
shown that the retailer or manufacturer on the web should provide consumer-customized
information so that the consumer evaluates alternatives in the consideration sets. Accordingly,
the web retailer or manufacturer must provide more appropriate information to attract, meet, and
exceed consumer expectations than must in-store retailers.

The first stage in the consumer buying process is the information search. Consumers collect and
evaluate information through consumer reports, magazine advertising, brand name, word-of-
mouth communication, and customized information. The advertising in magazines is intended to
improve brand awareness. Although consumers find much information through magazines, the
main reason that they use the web is to collect optimal information. Accordingly, in this study
information obtained from advertising in magazines can include components of brand and
customized information. Furthermore, pre-purchase information within consumer consideration
sets has an important effect on consumer buying decisions .

Information search activity is entered into with the intent of lowering the consumer's overall
perceived risk level. The important resources that influence consumer perceived risk are the
following :

(1) Their own experience with a product or brand

(2) Recommendation (word-of-mouth) from family, friends, and colleagues

(3) Previous imprinting as a result of promotion, usually in association with a specific brand
In addition to quantity of information, the quality levels of information can work as a critical
factor that controls appropriateness of decision-making . Consumers are likely to employ a
phased decision process, first filtering available alternatives and then undertaking detailed
comparison of the reduced consideration sets. This typical decision strategy requires quantity and
quality of information. Quantity of information is important because it helps consumers form
their consideration sets of alternative brands. Quality of information about brands refers to
accurate and current information and is essential when consumers need to make their final
choices. Particularly, quality of information refers to the usefulness of the available attribute
information in aiding a decision maker to evaluate his/her true utility associated with an
alternative.

In particular, consumer information processing in the pre-purchase context plays an important

role in reducing consumer perceived risk or uncertainty . In terms of purchasing a particular
product, a consumer is aware of some risks such as finance, psychology, performance, and time.
Social and physical risk in online commerce have less to do with consumer perceived risk.
Offering optimal information, recalling brand information, and utilizing vivid word-of-mouth
communication must reduce perceived risk and uncertainty and, ultimately, exert a positive effect

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on product purchase intentions. Accordingly, a large number of consumers participate in positive
pre-purchase information collection processing in order to reduce the risk. Furthermore, pre-
purchase information acquisition may alert consumers to risks and pitfalls within the product
choice of which previously they had been unaware . Recent research has indicated the presence
of two general types of uncertainty: knowledge uncertainty (uncertainty regarding information
about alternatives)and choice uncertainty (uncertainty about which alternative to choose). Choice
uncertainty appears to increase the search, while knowledge uncertainty has a weaker, negative
effect . Pre-purchase risk reduction essentially focuses on increasing the amount of certainty that
a satisfactory product will be purchased as well as reducing the negative consequences

Brand as Information Source

Brand information processing is defined as the extent to which consumers allocate attention and
processing resources to comprehend and elaborate on brand information in an ad. "Brand
information" is defined as any executional cue designed to communicate the advertised message.
In the context of product information collection, brand names are particularly useful keys
because the brand name becomes so closely tied to the product in the minds of consumers . They
are unique and international terms. Indeed, the use and evolution of brand in the context of an
international but virtual e-commerce marketplaces is a topic in itself . Consumers who purposely
purchase through e-commerce usually obtain information about a specific brand through various
sources . In particular, an understanding of dimensions of perceived risk enables marketers to
present their brands to instill consumer confidence . Foe example, acting as a guarantee of
consistent quality, a brand reduces performance risk. However, uncertainty of information and
inherent consumer risk in e-shopping produce far greater feelings of uneasiness than does in-
store shopping . Potential forces regarding building a familiar brand in the online and offline
marketplaces influence the amount of risk perceived in a given purchase. As more information is
made easily available to consumers, and they are given opportunities to reduce the consequences
of choice, the lower the perceived risk such as performance, financial, psychological, and time
risk . Consequently, a high possibility exists that positive information for a specific brand
decreases perceived risk for that brand, whereas negative information for considered brands
solidifies consumer risk perceptions more and more, and it may increase the possibility that
consumers will switch from the considered brand to other competitive brands . Nevertheless,
these researchers have only investigated by separating brand from risk; as yet, few researchers
have studied the causal relation between brand and perceived risk.

Thus, in terms of brand information, we present the following hypotheses:

H1a: Positive inclination towards a specific brand can lower the performance risk perception for
a brand purchase by the consumer.

H1b: Positive inclination towards a specific brand can lower the psychological risk perception
for a brand purchase by the consumer.

H1c: Positive inclination towards a specific brand can lower the financial risk perception for a
brand purchase by the consumer.

H1d: Positive inclination towards a specific brand can lower the time-loss risk perception for a
brand purchase by the consumer.

Word-of-Mouth as Information Source

Word-of-mouth is commonly defined as informal communication about the characteristics of a

business or a product which occurs between consumers . Most importantly, word-of-mouth
allows consumers to exert both informational and normative influences on the product
evelautions and purchase intentions of fellow consumers . Consumers can acquire information
for buying specific products through word-of-mouth communication called 'cyberbuzz' on the
Internet. Consumers tend to trust word-of-mouth communication with a reference group more
than they do commercial information resources in estimation of brand alternatives , frequently
respecting word-of-mouth as a means to reduce risk in making purchase decisions. Word-of-
mouth has a more important effect than other information resources on perceptions with respect
to food and household appliance purchases. Also, showed that when consumer perceptions of
service quality are high, consumers are willing to recommend the company to others. Why does
information by word-of-mouth have an effect upon consumers? One of several possible
explanations is the vividness of such information . Word-of-mouth information is fresher because
first-hand experience is passed directly to other people. Accordingly, word-of-mouth
communication is retrieved more easily from memory and its impact on consumers is relatively
greater .

Consumers are generally influenced by other people's opinions when in a purchase state of high
involvement.

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Therefore, consumers are apt to depend more on information from word-of-mouth
communication in the following situations:

(1) When transparency of the product is high

(2) When the product is complicated

(3) When verification by objective evaluation criteria is difficult

(4) When perceived risk is high

In spite of complaints about information overload, the primary reason people go online is to find
information, because the Internet has become popular as a resource for gathering information
about risk reductions and purchases.

Even though much prior research associated with word-of-mouth communication exists, no
studies have explained the causal relationship between word-of-mouth communication and
perceived risk. Thus, in terms of word-of-mouth information, we present the following
hypotheses.
H2a: Positive word-of-mouth can lower the performance risk perception for a brand purchase by
the consumer.

H2b: Positive word-of-mouth can lower the psychological risk perception for a brand purchase
by the consumer.

H2c: Positive word-of-mouth can lower the financial risk perception for a brand purchase by the
consumer.

H2d: Positive word-of-mouth can lower the time-loss risk perception for a brand purchase by the
consumer.

Customization as Information Source

we define customized information as "offering optimal self-relevance information for each

segmented customer based on experiences of existing or membership customers." Most
customers are likely to pay greater attention to messages that relate deeply to their own interests.

This presents the following hypothesis.

H3a: Providing customized information can lower the performance risk perception for a brand
purchase by the consumer.

H3b: Providing customized information can lower the psychological risk perception for a brand
purchase by the consumer.

H3c: Providing customized information can lower the financial risk perception for a brand
purchase by the consumer.

H3d: Providing customized information can lower the time-loss risk perception for a brand
purchase by the consumer.

5.Assess some of your brand choice decisions and identify At least two each that fall into
the category of extended problem solving, limited problem solving and routinised response
decisions. Explain how did your need for information vary in each case of each category
and why? What are the implications for marketers In view of this variation in requirement
of information?

ROUTINISES RESPONSE DECISION

a. Cooking oil / SOUP PACKET.
1 Roles and Family Influences--
-mother makes the decision.
-supported by the father
-buying decisions are a mixture of family interactions and individual decision making
Problem Recognition --do the consumers have a need.
Information search-- where will the information will be available.
Purchase decision--Choose buying alternative, includes product, package, store, method of
purchase etc.
Purchase--product availability.
Economic risk
Routine Response/Programmed Behavior--
Limited Decision Making--
Psychological factors include:
1 Motives--
2 Perception--
3 Ability and Knowledge--
4 Attitudes--
5 Personality--
6 Lifestyles--
7 Social Factors

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8 Roles and Family Influences--
9 Social Class--
10 Culture and Sub-culture--
limited problem solving

b. Life Insurance policies / TRAVEL BOOKING

roles and family influences.
-father makes the decision.
-supported by the mother
-family roles and preferences are the model for children's future family (can reject/alter/etc)
-family buying decisions are a mixture of family interactions and individual decision making.

Problem Recognition --do the consumers have a need.

Information search-- where will the information will be available.
Purchase decision--Choose buying alternative, includes product, method of purchase etc.
Purchase--product availability.
Personal risk
Social risk
Economic risk
Extensive Decision Making
Personal
Psychological factors
Psychological factors include:
1 Motives--
2 Perception--
3 Ability and Knowledge--
4 Attitudes--
5 Personality--
6 Lifestyles--
7 Social Factors
8 Opinion leaders--
9 Roles and Family Influences--
10 Reference Groups--
11 Social Class--
12 Culture and Sub-culture--
EXTENDED PROBLEM SOLVING

c. Automobiles / COMPUTERS
2 Roles and Family Influences--
-father and senior children make the decision.
-mother supports their decision.
-family roles and preferences are the model for children's future family (can reject/alter/etc)
-family buying decisions are a mixture of family interactions and individual decision making
-family acts an interpreter of social and cultural values for the individual.

Problem Recognition --do the consumers have a need.

Information search-- where will the information will be available.
Purchase decision--Choose buying alternative, includes product, package, store, method of
purchase etc.
Purchase--product availability.
Personal risk
Social risk
Economic risk
Extensive Decision Making
Personal
Psychological factors
Psychological factors include:
13 Motives--
14 Perception--
15 Ability and Knowledge--
16 Attitudes--
17 Personality--
18 Lifestyles--
19 Social Factors
20 Opinion leaders--
21 Roles and Family Influences--
22 Reference Groups--
23 Social Class--
24 Culture and Sub-culture--

The Consumer Decision Process (CDP) is a road map of consumer's minds that marketers and
managers can use to help guide product mix, communication and sales strategies :
Need recognition refers to the buyer's acceptance that the category (a product or service) is
necessary to remove or satisfy a perceived discrepancy between the current motivational state
and the desired motivational state.
Search for information:
Types:
• Internal: retrieving knowledge from memory or genetic tendencies.
• External: collecting information from peers, family and the marketplace.
Sources of information:
• Marketer dominated: anything the supplier does to inform and persuade
• Non-marketed dominated: friends, family, opinion leaders, media, WOM.

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Information processing:
• Exposure * Attention * Comprehension * Acceptance * Retention
Pre-purchase alternative evaluation:
• Evaluative criteria: standards used to compare different products & brands.
• Salient attributes: the most important.
• Determinant attributes: details that determine which brand or store consumers choose .
Purchase to decide whether to purchase:
• Choose one retailer (catalogues, aids on TV…)
• In-store choices (salespersons, product displays at POP…)
Post-purchase evaluation:
Consumption: the point at which consumers use the product - satisfied?
Post-consumption evaluation: possible results:
• Satisfaction: consumers' expectations are matched by perceived performance.
• Dissatisfaction: experiences and performance fall short of expectations
• Post-purchase regret: have I made a good decision? Did I consider all the alternatives? The
highest the price, the highest this factor.
Variables that shape the decision process:
VARIABLES THAT SHAPE THE DECISION PROCESS
Individual differences:
• demographics, psychographics, values, personality, lifestyle
• consumer resources (time, money attention * information reception and processing
capabilities)
• motivation
• knowledge (information stored in memory)
• attitudes (overall evaluation of an alternative)
Environmental influences:
• culture
• social class
• family (the primary decision-making unit)
• personal influences
• situation
Psychological processes
• information processing
• learning (process whereby experience leads to changes in behaviour)
• attitude and behaviour change
• NEED RECOGNITION
Need recognition refers to the buyer's acceptance that the category (a product or service) is
necessary to remove or satisfy a perceived discrepancy between the current motivational state
and the desired motivational state. If the need is not activated, there is no business!.
Options to activate it:
• Product innovations.
• Undermine consumers' perceptions about their actual state.
• Advertising (reminding the need).
Types of need recognition that can be activated:
• Generic need (primary demand): demand for the product or service category as a whole, but it
applies to all brands in the category .
• Selective need (selective demand): occurs when the need for a specific brand within a product
category is stimulated.
Purchase motives that can be activated.

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