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Consumer Behaviour
Consumer Decision Making

Individual Consumer

Environmental Influences

Organisational Buyer Behaviour

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Consumer Action Determines Sales


Now, marketing managers are convinced about 1) Delivering product benefits 2) Changing brand attitudes

3) Influencing consumer perceptions

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Satisfaction of Consumer Needs


1) Defining consumer needs 2) Identify the segment of consumers that have these needs 3) Positioning new products or repositioning existing products to meet these needs 4) Developing marketing strategies to ensure the communication & delivery of product benefits

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HISTORICAL PERSPECTIVE

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Marketing Strategies must be Based on

Defined Consumer Needs

Marketing Concept

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Development of the Marketing Concept


- Formulated in the early 1950s

- Mass Production and Mass Marketing


- Behavioral Research in the infancy - Emphasis on Economies of Scale - No economic necessity due to less purchasing power - End of Korean war in 1953 changed the Sales Oriented Focus - Marketers talk Behavioural terms
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Implications for Consumer Behaviour


1) Providing Spur to Behavioural Research

2) Creating more Customer Oriented framework for Marketing Strategies


3) Encouraging measurement of the factors that influence consumers to purchase 4) Emphasising Market Segmentation 5) Emphasising positioning to meet consumer needs

6) Creating greater selectivity in advertising and personal selling


7) Creating more selective media and distributive outlets
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Strategic Applications

1) Identifying new opportunities in the


marketplace 2) Evaluating the strengths and weaknesses of the existing brand offerings Two Important

Tasks

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So That

A 1: Define and segment the market A 2: Plan marketing strategies

A 3: Evaluate marketing strategies


A 4: Assess future consumer behaviour

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A simple model of Consumer Behaviour


Feedback to Consumer
Postpurchase evaluation

2.

The Individual Consumer

1.

3.

Environmental Influences

Consumer Decision Making

Consumer Response

4.

Marketing Strategies

Applications of Consumer Behaviour to

Development of Marketing Strategies

Feedback to Marketer

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Consumer Decision Making

High Involvement Purchase Decision Decision Making


(Information Search, consideration of brand alternatives)

Low Involvement Purchase Decision

Complex Decision Making


(Autos, Major Appliances)

Variety seeking
(Cereals)

Habit

(Little or no Information Search, consideration of only one brand)

(Cigarettes, Perfumes)

Brand Loyalty

(canned Vegetables, Paper Towels)

Inertia

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Complex Decision Making


Involves 1) Active information search 2) Evaluating alternative brands

3) Evaluation of brand purchased

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Importance of a Consumer Model


1) Encourages a total and integrative view 2) Helps identify means of information necessary 3) Encourages quantification of these variables

4) Provides a basis for segmenting markets


5) Provides a basis for developing strategies

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Limitations
1) Identifies only the most common elements 2) Components of the model may not be equally important for all product categories and 3) for all usage situations 4) Will vary among individuals in the same market 5) All purchase decisions are not equally complex

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A Model of Complex Decision Making


For 1) High priced goods 2) Products associated with high performance risks

3) Complex products (Stereo set, Home Computers)


4) Speciality goods (Sports Equipment, furniture)

5) Ego association (Clothing, Cosmetics)

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A Model of Complex Decision Making

Need Arousal

Consumer Information Processing

Feedback
Postpurchase Evaluation Purchase Brand Evaluation

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A - Need Arousal
Input Variables
INTERNAL 1. Consumers Past Experience 2. Consumer Characteristics Demographics Life-style Personality 3. Consumer Motivation EXTERNAL Environmental Influences face-to-face groups situational determinants social class culture Marketing Stimuli Product Price Promotion Store Merchandising Brand likes / dislikes Tendency to act

Consumers Psychological Set


Need Criteria

Stimulus Exposure

Tension State
Brand Attitudes Beliefs about the Brand

Need Recognition
(Initiation of decision making)

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Input Variables - Internal


1) Consumers Past Experience (Economy, Service, etc.) 2) Consumer Characteristics Demographic Life-style Personality

3) Consumer Motives (Maslow) Physiological (Food, Water) Safety (Security, stability) Social (affection, Acceptance) Ego (Prestige, esteem, success) Actualisation (Self-fulfillment)

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Input Variables - External


4) Environmental Influences Face-to-face Situation Social class Culture 5) Marketing Stimuli Product Price Promotion Store Merchandising

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Consumers Psychological Set


Made up of two components viz.

1) Need Criteria and


2) Brand Attitudes

Function of Cognitive i. Beliefs about the brand Affective ii. Evaluation of brands Conative iii. Tendency to act

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Stimulus Exposure
is a selective process that is directed by the need to

1) Reinforce existing brand attitudes and perceptions

&
2) Search additional information

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Need Recognition

When the need is recognised the state of tension occurs

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B - Consumer Information Processing


Search for Additional Information Perception of Stimuli Input Variables

Consumers Psychological Set

Stimulus Selectivity Exposure

Attention

Comprehension Retention

Need Recognition
Involves 1. Exposure to information 2. Organisation of information 3. Search for information

Memory

Past Information New Information

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Perception of stimuli
More likely when 1) Confirms to consumers past experiences 2) Confirms to consumers current beliefs about a brand 3) are not too complex 4) are believable 5) Relate to a set of current needs 6) Do not produce excessive fears & anxieties
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Memory

Information that is retained


is stored in the consumers Memory!

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Search for Additional Information


Most likely when 1) Feels that alternative brands being considered are inadequate 2) Has insufficient information about the brands under consideration 3) Receives information from friends or media sources that conflicts with current information/beliefs and past experiences 4) Is close to deciding on a particular brand and would like to confirm expectations about performance

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C - Brand Evaluation
Perception of Stimuli

Changes in Consumers Psychological Set


Changes in Need Criteria Changes in brand attitudes

Need Association
Define needs, Establish priorities of needs Compensatory decision rules Noncompensatory decision rules

Expected Satisfaction
Arrive at expected satisfaction for each brand based on need association

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Changes in Consumers Psychological Set


1) Changes in need criteria used to evaluate brands 2) Changes in beliefs about the brands Cognitive 3) Changes in brand evaluation Affective

4) Changes in tendency to act Conative

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Need Association
Develop a priority of needs and relate a brands characteristics to these needs

A: A compensatory model for Brand Evaluation

&
B: A noncompensatory model for evaluation

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Compensatory model for evaluation


Consumers do 1) Define their needs & order them by importance along with goal object 2) Determine the brands under consideration

3) Determine degree to which brands satisfy the needs


4) Select brand that will best meet the more important needs

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CB Need Criteria Importance of need 10 Goal Object Service Cost Gas Mileage Make / Brand C1 C2 C1 C2 Service Dependability & Quality of Repairs Performance Economy Pick Up Styling 2 Exterior Interior 8 Smooth ride 8 Speed C1 C2 C1 C2 C1 C2 C1 C2 C1 C2 C1 C2 7 Evaluation of Brand 4 8 2 8 8 8 8 7 10 8 10 7 10 4 9 7

31 Contribution To expected satisfaction 40 80 20 80 64 64 64 56 80 64 80 56 20 8 18 14

Economy

Total Contribution to Expected Satisfaction Count by C1=386 & that by C2=422 MS

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SS model as actually evaluated!


Compensatory model used for evaluation
Import ance of Need Brand
8 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla 10 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla 2 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla 8 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla 4 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla 4 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla 5 Skoda Octivia Honda Civic Optra Magnium Toyota Corolla Skoda Octivia Honda Civic Optra Magnium Toyota Corolla

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Need criteria
Cost

Evaluation of Brand
6 7 8 8 10 5 8 7 6 7 8 8 8 6 8 6 8 9 7 6 8 8 6 5 10 7 7 6

Contribution to expected satisfaction


48 56 64 64 100 50 80 70 12 14 16 16 64 48 64 48 32 36 28 24 32 32 24 20 50 35 35 30 338 271 311 MS 272

Economy

Rear Defrogger

Fuel Type

Interior Styling

Exterior Styling

Cost of Maintenance

Total Score

SS Sunil Sood PG Retail (06-08) - #176

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Noncompensatory model for evaluation


Assumes that consumers rate brands by one criterion at a time rather than evaluating each brand across all criteria.
Goal Object Service Cost Make / Brand C1 C2 C3 C4 Gas Mileage C2 Evaluation of Brand 4 8 8 8 8 Remark Eliminated

C3
C4 Speed of Repairs C2 C3

8
6 8 6 Eliminated Eliminated

Selection = C2 7 MS

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SS model as actually evaluated!


Non-compensatory model used for evaluation
Skoda Octivia Honda Civic Optra Magnium Y N Y Y Y Y

Economy

Toyota Corolla Skoda Octivia Optra Magnium

Cost of Maintenance

Toyota Corolla
Skoda Octivia

N
Y N MS

Fuel Type
7

Optra Magnium

SS Sunil Sood PG Retail (06-08) - #176

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Expected Satisfaction The brand that comes closest

to meeting the most important needs


is expected to provide the most satisfaction

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D & E - Purchase & Postpurchase Evaluation


Search for Additional Information
Selectivity

Input Variables

Consumers Psychological Set

Stimulus Exposure
Tension State

Perception of Stimuli

Changes in Consumers Psychological Set

Feedback

Need Recognition
Instrumental actions

Postpurchase Evaluation

Purchase

Intention to Buy
Outside Constraints

Expected Satisfaction

Need Association

No Purchase

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Intention to Buy
Instrumental actions viz 1) Select a dealer

2) Decide when to purchase

3) Go to place of purchase

4) Arrange for financing

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Purchase
Issue for Strategies

1) What influenced consumers to buy?

&
2) Will they be satisfied after purchase?

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Postpurchase Evaluation
Done in the process of consumption 1) By the consumer and not by the purchaser

2) Purchase depends on consumer expectations of the degree to which brands are likely to satisfy needs.

3) Whether the brand is likely to be repurchased

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Satisfaction versus Dissatisfaction

S => reinforces +ve attitudes


towards brands

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Any

ve information about the chosen product causes

Postpurchase Dissonance

It means conflicting results from two contradictory beliefs

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How consumers react


1) Ignoring the dissonance information

2) Selectively interpreting the information by saying that any brand will have occasional lemon.

3) Lowering level of prior expectations, though few problems, acceptable!

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Ways

1) Focus on +ve performance and tend to dismiss or rationalise the ve!! ASSIMILATION THEORY

2) CONTRAST EFFECT (Discard it!)

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Habit, Learning and Decision Making


Opposite of complex Decision Making Habit. 1) Habit and learning lead to brand loyalty. Brand loyalty is the result of consumer involvement. 2) Habit and learning can also lead to buying the same brand because of inertia. Inertia is the result of lack of involvement.

Habit = Monotony + Boredom

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Model of Habitual Purchasing Behaviour


Selectivity

Consumers Psychological Set

Stimulus Exposure

Perception Of Stimuli

Need Association

Tension State
Need Recognition

Feedback

Post-purcshase Evaluation Satisfaction & Reinforcement Dissatisfaction & Extinction

Purchase

Intention to buy

Outside Constraints

Revert to Complex Decision Making

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Habit
Model of habitual purchasing behaviour. as a limitation or absence of

1) Information seeking

&
2) Evaluation of alternative choices

Classification of habitual purchasing behaviour.

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A classification of Habitual Purchasing Behaviour


Was old brand repurchased?

No*

Yes

How many brands were thought of at outset of decision process?

Many*

A Few

One

*Complex decision making **Decision making that approaches habit ***Habit

Was old brand among those thought of?

Was old brand one mainly thought of?

No*

Yes

No*

Yes

Any brand-related info seeking?

Any brand-related info seeking?

Yes 7

No**

Yes**

No***

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Functions of habit
Habit provides two important benefits to consumers. 1) It reduces risk

2) It facilitates Decision Making. Result is 1) A shift in type of information sought General product information Specific brand information 2) More reliance on information on price and availability Less reliance on product specific information (say, freshness)
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Consumers Psychological Set

Distribution Product

..Extensive ..Packaged goods, few services and direct selling ..reminder

Advertising

In-store stimuli..More display, Shelf position Pricing ..Deals, special sales, free samples.

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Probability of purchasing same brand again

Repetitive Purchases

Time spent in prepurchase information search

Complex decision making Limited decision making

habit

Repetitive Purchases
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Inducing a Switch from habit to Decision Making


1) Advertise new features

2) New feature never tired

3) Free product samples, Coupons or price specials.

4) Line extension of existing brand

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Habit and Consumer Learning


Learning theory
Key concepts => Contiguity, reinforcement, extinction

LT1: Classical Conditioning Behaviouristic

LT2: Instrumental Conditioning

LT3: Cognitive Learning

Cognitive

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Types of Learning Theories

Learning Theories

Behaviorist

Cognitive

Classical Conditioning
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Instrumental Conditioning
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LT1: Classical Conditioning

Secondary stimulus is paired with Primary stimulus that already elicits a particular response. Eventually, the secondary stimulus will elicit the same reaction as the primary stimulus.

Marlboro
The pairing results in association formation. Repetitive stimuli & establishment of a close association contiguity between a secondary stimulus (Social Success) & a primary stimulus (The Brand)
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LT1: Classical Conditioning

Unconditioned stimulus

Unconditioned response

Conditioned stimulus

Conditioned response

Emphasis: Association through repetition and contiguity


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LT2: Instrumental Conditioning


1) Individual determines the response that provides greatest satisfaction. 2) Response is within conscious control of individual. 3) Subject is free to act in a variety of ways. The consequences of the act (i.e. degree of satisfaction or dissatisfaction) will influence future behaviour. .B.F.Skinner. 4) Reward repeat v/s punishment act.

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LT2: Instrumental Conditioning

Behaviour

Increase or decrease in probability of response

Reward or Punishment Emphasis: Reinforcement, dependence of outcome on learners action


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Reinforcement

Increases probability of purchase of same brand repeatedly => HABIT

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Extinction and forgetting


1) Consumer dissatisfaction leads to extinction 2) Stimulus no longer repeated / perceived leads to forgetting

100%

Probability Of purchasing on the next trial


50%

No. of repetitive exposures over time.

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Application of LT 2
1) Focus on reinforcement so

2) Product satisfaction

3) Role of advertising is to increase the consumers expectation of reinforcement 4) Sales promotion should create initial inducement

P.S.

LT 2 is closer to HABIT than LT 1

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LT3: Cognitive Learning Theory


1) Learning is problem solving process. Thought process involved in consumer learning

2) Awareness, Interest, Evaluation.

3) Emphasise thought process achieve goals

4) Reinforcement is recognised part of cognitive learning. LEARNING is result of INSIGHT.


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LT3: Cognitive Learning Theory

Goal

Purposive Behaviour

Goal Achievement

Insight

Emphasis: Problem solving; understanding relationships


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Brand Loyalty

Close link between Habit, learning and brand loyalty.

Brand loyalty represents a favourable attitude towards and consistent purchase of, a single brand over time

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Two Approaches

A 1) Instrumental Condition (1. Stochastic and 2. Deterministic)

A 2) Cognitive Theory (1. Tucher Versus 2. Jacoby)

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1)

Stochastic Model since doesnt predict one specific course of action probability terms

2)

Deterministic Model . Since predict a particular course of action based on input variables such as needs, attitudes, consumer characteristics, etc. E.g. Habit model

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A1: Instrumental Conditions - Behavioural


Rely on consumer panel data, measure Brand Loyalty by

1) Sequence of purchase

&
2) Proportion of purchase

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Limitations
1) Past behaviour may mislead. E.g.. Brand 1 for self brand 2 for wife and high priced brand 3 for guests 2) Purchase may not reflect reinforcement a) reversion (switch back to original) b) conversion (loyal to new brand) c) vacillation (random switches) d) experimentation (systematic trial) Note: Only 2a) & 2b) => A1

3) Multidimensional; concept not just past behaviour but commitment to brand

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1)

Tucher No consideration should be given to what the subject thinks or what goes on in his central nervous system. His behaviour is the full statement of what brand loyalty is.

2)

Jacoby To exhibit brand loyalty implies repeat purchasing behaviour based on cognitive, affective, evaluative and predispositional factors the classical primary components of an attitude.

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A2: Cognitive Approach

1) Brand Loyalty includes both attitude and behaviour

2) Favourable attitude together with commitment and involvement with purchase leads to Brand Loyalty

(DAY)

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Low involvement Decision Making

Product considered not

Important to the belief system


and not strongly identify a product

Acceptable (optimal X) minimise problems (max benefits X)

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Brand Loyal Consumer


1) More likely to be influenced by reference groups 2) More self confident in his or her own choice. 3) More likely to perceive a higher level of risk in purchase 4) More likely to be store loyal.

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Consumer Involvement
1) Has functional significance 2) Entails significant risks 3) Emotional appeal (JWT) 4) Identified with norms of a group

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Low involvement Hierarchy


1) Act without thinking

2) Receive information passively .. information catching and not seeking 3) Need. (How is need aroused in low involvement products) familiarity with repeated advertising. Thus 1. Brand belief by passive learning 2. Purchase decision 3. May / may not be evaluated
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Perceived Differences Between Brands

High Involvement Complex Decision Making or Brand Loyalty Dissonance Reduction or Attribution

Low Involvement Variety seeking


Random Experimentation Choice

Significant

Few

Inertia
Random Choice Spurious Loyalty

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High Involvement
Significant Differences Between Brands Model

Low Involvement Model

Beliefs Evaluation Behaviour

Beliefs Behaviour Evaluation

Theory

Cognitive Learning

Theory

Passive Learning

Decision Process

Complex Decision Making or Brand Loyalty

Decision Process
Variety Seeking

Few Differences Between Brands

Model

Behaviour Beliefs Evaluation

Model

Beliefs Behaviour

Theory

Theory

Dissonance or Attribution theory

Passive Learning

Decision Process
Dissonance Reduction or Attribution

Decision Process
Inertia

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Earlier figures show


1) Complex decision Making and Brand Loyalty 2) Inertia a passive process a) information processing b) brand choice c) evaluation or X !! 3) Variety Seeking a) try variety of brands b) little psychological or social involvement c) brand switching exists!
(*1982 R.H. Bruskin)

4) Dissonance Reduction or Attribution


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Dissonance Theory
Dissonance is a state of post purchase conflict created by contradictory belief.

If consumer is involved in the purchase decision and sees


little difference between characteristics of several brands then purchase dissonance is likely to result regardless of the brand chosen. 1) Behaviour occurs first

2) Brand beliefs are formed to support the chosen brand

3) Brand is favourably evaluated


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So Attribution Theory
Consumer will attribute certain motives to their actions after the fact.

{Since I bought it it must be good!}

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Marketing Implications (I) Complex decision Making V/s Dissonance

1) If significant difference => advertise

2) No perceived brand difference=> advertising should a) influence b) reassure, once choice made

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Marketing Implications (II) High Involvement V/s Low Involvement


1) For LI advertising a) create awareness b) familiarity through relations c) only a few points should be emphasised d) positively identified symbol with brand to be advertised

2) For HI advertising a) do more than create awareness b) influence with persuasive messages c) content is the key (but not the repetition) d) complex message involved and varied A/V e) likely to deal more directly with desired product benefit
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A) Advertising B) Positioning: - LI to solve problem, HI to deliver benefit C) Price: - LI products are frequently purchased on price alone (REF: Lastovicka in study of margarine) D) Sales Promotion: - Hence high for LI (brand switch when brand reverts to normal price) E) In Store Condition: - Also high for LI product F) Distribution: - widespread (Horizontal) distribution for LI G) Product trial: - Important for LI product
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Consumer Involvement
1) KRUGMANS Theory of passive Learning.

2) SHERIFS Social Judgment Theory.

3) THE ELABORATION LIKELIHOOD MODEL

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L.I. Theory 1: KRUGMANS Passive Learning


Perspective of Television 1) TV is L.I. medium that results in passive learning, little influence on attitudes 2) TV advertising is animate, viewer is inanimate.

3) Pace of viewing is out of control, little opportunity for reflection of making connections 4) TV is effective for L.I. products 5) The public lets down its guard to the repetitive commercial use of television.
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L.I. T1 V/s traditional views


Customers are 1) Info processors 2) Info seekers 3) Active audience for advertising

4) Evaluate brands before buying


5) Seek to maximise expected satisfaction

6) Personality and lifestyle related to Consumer Behaviour


7) Reference groups influence Consumer Behaviour
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L.I. Theory 2: Sheriffs Social Judgment


1) Sheriff describes an individuals position on an issue according to that individuals involvement with the issue.

2) Concept of involvement with latitude of a) Acceptance, b) Rejection, c) Non committed. a b c

(Say H.I., with definite opinion will a less, b more and c few!) (NOTE: (1) President = H.I. & (2) State = L.I. election)

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L.I. Theory 3: Elaboration likelihood Model


Petty and Cacioppo model
1) THE WAY (PROCESS H.I. and L.I. Conditions).

2) Elaborate (central) to Non-elaborate (peripheral)

3) Degree of elaboration depends on the RELEVANCE

4) Uninvolved customer is PASSIVE so provide stimuli that are peripheral to the message.

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STRATEGIC ISSUE IN L.I. DECESION MAKING


These points are covered one slide each 1) Should try to get C more H.I.

2) Repetitive buying inertia to variety seeking

3) Should advertising perspective differ from L.I. v/s H.I.

4) Should segmentation be a basis of L.I.- H.I. for a particular product category.

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SHIFTING CONSUMER FROM Low Involvement TO High Involvement


1) Link product to some involving issue

2) Link product to some involving personal situation

3) Link product to some involving advertising

4) Change importance of product benefits

5) Introduce important characteristics in product

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SHIFTING CONSUMER FROM INERTIA TO VARIETY SEEKING

If brand market leader

Continue inertia

Hence judicious selection of marketing mix

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ADVERTISING STRATEGIES FOR L.I. PRODUCT


1) Focus on few key points

2) High repeat advertising short duration


3) Considerable LEEWAY acceptable to consumer

4) Visual & new message components emphasized

5) Advertising can be primary means of differentiating from competition 6) T.V. (rather than print) be primary vehicle
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Segmentation by Degree of Customer Involvement


1) Introspect strategic issues (& philosophy)

2) Toothpaste, say, H.I., L.I. & medium I


3) Cereal is L.I. product but parents concerned , nutritional benefits for the children are thus H.I. consumers 4) Where it is possible to identify H.I. & L.I. marketers should consider differentiation

Part 1

Consumer Decision Making Concluded!


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THE INDIVIDUAL CONSUMER

1) Consumers thought variables Perceptions Attitudes. Needs

2) Consumers Demographics Lifestyle Personality characteristics.

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Consumers Thought Variables


CTV are CENTRAL to CB since they affect development of product and promotion strategies.

Perceptions
Perceptions provide criteria for evaluating promotional effectiveness by indicating levels of brand and advertising awareness. Brand Attitudes Brand attitudes provide basis for determining whether the marketer is positively influencing. Needs Needs define areas of market opportunities for new products and repositioning.
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Consumers Demographics Lifestyle Personality characteristics


are important in describing the consumer and are used to segment the market. Management wants to know the characteristics of its potential users so that it can develop promotional strategies to appeal to them and select media vehicle/s to reach them.

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CONSUMER PERCEPTIONS
AND INFORMATION PROCESSING

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Perceptions

are the basis by which consumers process the information communicated by advertisers (communicators)

and other sources of marketing


and environmental stimuli.

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A. Key step in perception of marketing stimuli viz selection and organization of stimuli

B. Model of information processing for H.I., L.I. decisions. C. What consumers are perceiving and processing-marketing stimuli.

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A. Consumer Perceptions
Two processes are

I. Selective Perception

&
II. Perceptual organization

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I. Selective Perception
1) Selective Exposure 2) Selective Attention 3) Selective Comprehension

4) Selective Retention

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Selective Exposure Engel Study

New car purchasers recall and interest in advertising of own cars

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Selective Attention Brehm Study

Supportive information, Avoid contradictions Choose gifts Report +ve vs. ve

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Selective Comprehension Kasserjian and Cohen Study

Interpret discrepant as consistent Smoker : Cancer 80% : 52%

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Selective Retention Bogart Study


Remember relevant to Decision
2 min. ago ad. Identify Later content % Dropping !

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High

Level of Information
Routine and expected information screened out Information unrelated to needs screened out

Low Low High

Degree of Involvement
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Functions of selective perception: -

1) SP ensures that consumers will receive information most relevant to their needs and to brand evaluation => Perceptual vigilance (size of same coin- big by poor children)

2) consumer sometimes distort information to conform their beliefs and attitude

second function of SP is called as perceptual defense.

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Conditions likely to produce perceptual vigilance


1) Consumer needs structure (say mileage oil ads) 2) Greater the needs greater the perceptual vigilance (technology products) vigilance is in selecting 3) Also true for low need vigilance is in discarding

4) So, PV is highest when for very H.I. & L.I. When H.I.=> Information unrelated to needs is out When L.I.=> Routine/expected information is ruled out.

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Conditions Likely to produce Perceptual Defense.


1) Stronger beliefs and attitudes, greater PD 2) Greater consistency of experience, Greater PD., jewelers, family doctors. 3) Greater anxiety produced by stimulus, greater PD

4) Greater level of post purchase dissonance, Greater likelihood of PD

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Perceptual Equilibrium When Consumers choose information consistent with prior beliefs or interpret information to confirm to these beliefs they are processing

information to ensure perceptual equilibrium

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In support are
1) Sheriff's social judgment theory.

2) Heiders balance theory. When information about an object conflicts with the consumers beliefs balance will be achieved by changing ones own opinion about the object, the sources of information or both.

3) Cognitive dissonance theory.

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Perceptual Disequilibrium Consumer do have conflicts with prior beliefs and often change brands however, such Conflicts or Disequilibrium can occur either

before or after the purchase

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Disequilibrium before the purchase


1) Consumer is more likely to listen since commitment has not been made

2) So, accepts contradictory information before purchase.


3) Such information, in fact may be more revealing 4) Once decision => Contradictory information out for Perceptual Equilibrium

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Disequilibrium after the purchase


1) Consumer also accepts discrepant information after the purchase

2) Refer learning and cognitive dissonance theory.

3) Result is reduction in probability of repurchase 80% non smokers accept link between smoking and cancer, over 50% heavy smokers also accept the link, these smokers are in state of Disequilibrium.=> Result proves perceptual Equilibrium.

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II. PERCEPTUAL ORGANISATION

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II. Perceptual organisation

Principle 1:- A tendency to place information into logical categories, Categorization helps consumer process, know information quickly and efficiently and also helps consumer to classify new information.

Principle 2: - Integration means various stimuli will be perceived as organized whole, giving an integrated meaning for the stimuli. (derived from GESTALT psychology THE WHOLE is greater than SUM of parts Ex: every component of advertising => brand image)

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Perceptual categorization
Consumer categorises stimuli by 1) Level say price ,H/M/L , size ,L/M/S etc 2) Association- Brand name , Category

3) Generalisation- new information as something familiar


Resulting in Perceptual Scripts

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Perceptual Integration
GESTALT psychologists basic hypothesis

PEOPLE ORGANIZE PERCEPTIONS TO FORM A COMPLETE PICTURE OF AN OBJECT

1) Closure, 2) Grouping and 3) context


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1) Closure => Tendency to fill in the missing elements when the stimulus is incomplete. 2) Grouping => A variety of information is perceived as CHUNK. Thus chunking of information through Proximity .1st and 2nd due closeness Similarity. Stereotyping Continuity: Grouping and uninterrupted. 3) Context => Tendency to perceive by context Figure. prominent stimuli => perception Ground (back) less prominent to stimuli => perception

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B. Information Processing

I) High Involvement Information Processing

&
II) Low Involvement Information Processing

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I. High Involvement Information Processing


Is extension of Information Processing in Complex Decision Making 1) Select stimulus get stored in memory Pay Attention=> stimulus Comprehension => stimulus Retaining => stimulus

2) In process of selecting stimulus consumers organize themselves by Categorisation Integration 3) Storage in memory and eventual retrieval of information is used for brand evaluation
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High Involvement Model of Information Processing


Search For Additional Information (External Source)

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Consumers Psychological Set

STIMULUS EXPOSURE

Perception Of Stimuli
Organisation

Brand Evaluation
Changes in Beliefs about the brand
Changes in brand Evaluation Changes in Tendency to Act

Selection Attention
Comprehension

Categorisatio n

Retention

Integration

STORAG E

RETRIVAL
(Internal Search)

MEMORY MS

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II. Low Involvement Information Processing

Information can be stored in memory without going through

a sequence involving
attention and comprehension

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Low Involvement Model of Information Processing


Search For Additional Information (External Source)

Consumers Psychological Set

STIMULUS EXPOSURE

Perception Of Stimuli
Organisatio n

Brand Evaluation
Changes in Beliefs about the brand
Changes in brand Evaluation Changes in Tendency to Act

Selection
Categorisation

Retention

Integration

STORAG E

RETRIVAL
(Internal Search)

MEMORY MS

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Steps in information processing

Step1: - Selection Ref: Elaboration Likelihood Model (ELM) e.g. Huggies Step2: - Organisation Resulting in information processing strategies Reason : Consumers need some set of guidelines or decision rules Step3: - Memory Frequency of advertising for retention Attribute ratings for best brand (Concept study result Testing )

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Information Processing Strategies

TYPES OF STRATEGIES

BRAND STRATEGIES

NONBRAND STRATEGIES

BRAND EVALUATION

INFORMATION CHUNKING

PROCESSING BY ATTRIBUTE

PROCESSING BY OBJECT

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Marketing Stimuli &

Consumer Perception

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C. Marketing Stimuli & Consumer Perceptions


Marketing Stimuli:Any communication or physical stimulus that is designed to influence consumer

1) Primary Stimuli:- Product and its components

2) Secondary Stimuli:- Words, pictures, symbols, or other stimuli associated with the product like price, merchandising, sales, promotion etc.

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Key Requirement: Product Concept Development

Product concept is a bundle of product benefits that can be directed to the defined needs of consumers through messages, symbolism & imagery and it is organization of secondary stimuli

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Stimulus factors affecting perceptions


A) Structural Factors Size:-Increase in Impact=Square root of size Position:-Specific pages, upper portion etc. Colour:-Colour ad prefer to B&W ad. Contrast:-Produce increased attention Novelty:-Attention getting device B) Sensory Smell Taste Feel Colour factors :- perfume=>expensive v/s cheap :- Strong => Coffee :- Textiles (& such common factors)

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Stimulus discrimination

Whether consumers can discriminate

Hence,

Advertising is the key ingredient!

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The Just Noticeable Difference.(JND)

Differential threshold exists in comparing 2 stimuli This differential threshold represents JND

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Webers law
Two German psychologists (100 yrs ago)

1) Stronger the initial stimulus, greater the change required for (new) stimulus to be seen different

&
2) Increase in difference required to reach JND is CONSTANT K=I/IK=constant , I = original, I=
e.g. for a category of music system.on a price of 100$, 10$ increase is JND

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Absolute threshold:Below which consumer cannot direct stimuli at all.

Subliminal perception:Perception of a stimulus below the conscious level.

(Limen.Threshold level at which perception occurs)

Note:-Vicary Test eat popcorn and drink coca cola shown in movie theatre for 1/3000 th of a second at intervals of 5 seconds 58% & 18% growth respectively
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Stimulus generalisation
Consumers learn to generalise from 1 similar stimulus to another (Similar to classical conditioning)

(Brand loyalty is a form of stimulus generation)


e.g. Automobile=horseless carriage (horse + carriage) at the time of first introduction

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Individual differences in Stimulus Perception


On account of three characteristics viz.

1) Perceptual ability 2) Perceptual Style

3) Perceptual Disposition

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1) Perceptual abilities
Three components viz.

1) JND level 2) Adaptation level (adjusting to the stimuli) 3) Attention span. (Number of times perceived) are different for different Consumers

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2) Perceptual styles
Certain consumers have a propensity to process information in a certain way.

1) By attitude 2) By object

3) By simple decision rules

This PROPENSITY defines perceptual style

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3) Perceptual predispositions

Consumers needs, attitude and past experiences will affect how consumer perceives stimuli

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Measuring Consumer Perception

1) Exposure

2) Attention 3) Comprehension 4) Retention

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Measuring Information Processing

1) Amount of information consumers require

2) Processing strategies they use 3) The way information is categorized 4) The way it is evaluated

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Consumer Attitudes And

Needs

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Measures of attitude and need components


Attitude components
Brand beliefs (b)
b1: How likely is it that Brand A has the following characteristics: Brand A is a highly carbonated cola Improbable__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Probable

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Brand A is a sweet cola Improbable__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Probable b2: Rate Brand A by the following characteristics: Highly Carbonated__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Not Carbonated

Sweet__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Not Sweet b3: Indicate how well Brand A is described by the following characteristics: Brand A is a highly carbonated cola Describes very well__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Does not describe at all

Brand A is a sweet cola Describes very well__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Does not describe at all

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Measures of attitude and need components


Attitude components
Overall Evaluation (A)
A1: Rate Brand A as follows: In general, In general, I like it very much __ __ __ __ __ __ __ __ __ __ __ __ __ I dont like it at all A2: Rate Brand A as follows: Very favourable __ __ __ __ __ __ __ __ __ __ __ __ __ Very unfavourable

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A3: Which of the following brands do you prefer most? Which of the brands do you prefer second, third, etc.?

A4: Suppose you could pick ten free cans of cola and had the choice of any combination of brands, which brands would you pick? How many cans of each brand? (Make sure the total adds up to ten cans.)

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Measures of attitude and need components


Attitude components
Intention to Buy (BI)

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What is the likelihood you will buy this brand the next time you purchase cola? Definitely will buy Probably will buy Might buy Probably will not buy Definitely will not buy _____ _____ _____ _____ _____

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Measures of attitude and need components


Need (Value) components
Direction component (a)
a1: Indicate how would you evaluate the following: A highly carbonated cola Good__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Bad

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A sweet cola Good__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Bad a2: Indicate the degree of satisfaction you would get from the following: A highly carbonated cola Very satisfied__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Very dissatisfied

A sweet cola Very satisfied__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Very dissatisfied a3: Think about your ideal brand of cola and rate it on the characteristics listed below: Highly Carbonated__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Not Carbonated 7 Sweet__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ Not Sweet MS

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Measures of attitude and need components


Need (Value) components
Intensity of Importance (I)

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Rate each of the following characteristics based on how important they are in determining your selection of a brand of cola.

Right degree of carbonation

Very important__ __ __ __ __ __ __ __ __ __ __ __ __ Not important at all

Right level of sweetness Very important__ __ __ __ __ __ __ __ __ __ __ __ __ Not important at all

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The nature of Attitudes and Needs

Attitudes

are learned predispositions to respond to an object or class of objects in a consistently favourable or unfavourable way. - Gordon Allport

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The nature of Attitudes and Needs


Needs

are inner motivational states those are aroused by external stimuli or internal cues..

(...needs are the goals consumer strives for in making a purchase)

Needs influence attitudes and attitudes influence purchase.

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Attitudes in HI decisions
Three components of attitudes

1) Beliefs. Thinking or cognitive component 2) Brand Evaluation. Feelings or affective component (traditional definition of attitudes) 3) Intention to Buy.. Action or conative component.

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Perceived Instrumentality Brand Beliefs Consumer Needs

Brand Evaluation

Intention to Buy
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Study by Woodside
1) Brand attitudes were measured on a multidimensional basis by rating of brand attributes 2) And on a one dimensional basis of an overall evaluation of brand. Findings: - Broader multidimensional measure of brand attitudes predicted intensions to buy much better than narrower single measure THUS This new definition of an attitude is the basis of multiattribute models
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Attitudes in L.I. decision

1) Attitudes dont have a central role in L.I. decision (As in H.I. decision)

2) Attitudes may not have predictive value but frequently has diagnostic value

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Functions of attitudes
DANIEL KATZ 4 classification

1) The utilitarian function 2) The value expressive function

3) The ego defensive function

4) The organization of knowledge function

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1. The utilitarian function

Attitudes guide consumer in achieving desired needs

E.g. instant relief analgesic the brand


CREST WHITENS TEETH.. LISTERINE FRESHENS MY MOUTH

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2. The value expressive function

Attitudes express a self concept & value such as system conservative & dress, success & wealth PEPSI DRINKERS THINK YOUNG

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3. The ego defensive function

Attitudes protect ego from anxieties and threats. Mouth washes (Listerine) for

bad breadth avoiding


Marlboro smokers are masculine

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4. The organization of knowledge functions

Attitudes organize the mass of information Consumers are exposed to daily and help

set up standards on which to judge the


information 7UP is caffeine free {UN- COLA}

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Attitude development
Through a learning process affected by

1) Family influences

(e.g. J&J at her wedding mother gifts baby powder to daughter)

2) Peer group influences

3) Information and experience

4) Personality. (Say aggressive personality by attempt to excel buys competitive or expensive items.)
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Attitude components
Is extension of Information Processing in Complex Decision Making 1) Beliefs (cognitive). 2 Types informational (with attribute) evaluative (with benefits)

2) Brand evaluation (affective).one dimension i.e. poor => excellent or prefer => reject

3) Tendency to act (cognitive)..Purchase intact

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Relationship between C-A-C (B-E-B)

1) Consistency between C-A-C

2) BALANCE THEORY Links Cognitive with Affect A person seeks to achieve balance between evaluation and belief

Note: B-E-B sometimes logically inconsistent

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Need Components

Made up of

1) Direction .. Nature of need (mild to strong coffee).

2) Intensity. Importance of need to the individual

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Attitude And

need measurement

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BELIEFS
Three methods b1 rates brand attributes on a probability basis

b2

scaling device called semantic differential

b3

measures accuracy of the description

p.s. Semantic differential equal interval scale Semantic differential method more popular
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EVALUATION

a1

likeability

a2

favorability

a3

rank order of preference (ordinal scale)

a4

constant sum scale (ratio properties)

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TENDENCY TO ACT

1)

Purchase intend scale

2)

Standard scale

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NEED

n1

Direction a1,a2,a3 (semantic differential scale is used)

n2

Intensity i1, i2 (importance scale is used)

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The Relationship of Attitudes to Behaviour

1) Evidence of relationship between attitude and behaviour

2) Relationship between intension to buy and behaviour

3) Factors inhibiting the relationship between the attitude and behaviour.

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The Relationship of Behaviour to Attitudes

1) Cognitive dissonance ..Attitudes change to confirm to previous behaviour, thus reducing the post purchase conflict

2) Passive Learning..Attitude after usage

3) Disconfirmation of expectation..The two theories of assimilation and contrast

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Multiattribute Models of consumer attitude

determines how well a brand meets consumer needs across several product attributes. Thus helps in diagnosing strength and weakness of their brands to competition.

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Nature of Multiattribute models

All models regard attitude as a function of consumer beliefs about the attribute of a brand

They also weigh beliefs by value or importance of the attribute .

E.g. Consumer who regards Pepsi as a strongly carbonated, sweet cola and places a high value =>will have positive attitude =>likely to buy.

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The Original Fishbone model

An attitude towards an object depends on the probability that the object has certain attributes and on the value, placed on these attributes.

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The Extended Fishbone model (Modifications)

Modification 1----- attitude measurement is directly proportional


to act of purchasing

Modification 2 ---- Other elements - social influence

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Non compensatory models of attitude structures

1) Conjunctive

2) Disjunctive

3) Lexicographic

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Demographics

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Needs and Attitudes v/s Consumer Characteristics


1) Product specific Are generalized

2) Related to brand / product


3) Subjective 4) Harder to formulate 5) Harder to formulate, measure 6) Skewed towards cons behav. 7) Mrktr unaware of it, is 7 admitted but probed

Not related to brand / product


Objective Standardized, especially demographics Measurable Skewed towards cons description Mrktr unaware of it, is flying blind
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Changing Demographic Trends


A) Increased proportion of working women

B) Women employed in traditional male jobs


C) Changing family roles so, %age of males shopping for food, cooking for family and taking care of young children goes up D) Changing age composition so, Increased youth market, senior citizens.. E) Elderly Market Increase in life expectancy,

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Changing Demographic Trends


F) Youth market High %age of population with high purchasing power

G) Family composition Increase in divorce rate, joint family goes down (Nest Theory)
H) Changes in birth rate Coupled with mortality rate I) Income groups HIG/MIG/LIG TO 9 tire J) Regional trends Urban/rural .. Town specifics K) Increasing mobility (e.g. Average American moves 14 times in life)
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Demographics for Marketing Strategy

1) Describe consumers

2) Identify brand or product segments 3) Select media 4) Evaluate the potential for new products

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PSYCHOGRAPHICS

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Psychographics - Life Style (AIO grid)

A mode of living that is identified by how people spend their time (activities-A); what they consider important in their environment (interests-I); and what they think of themselves and the world around them (options-O).

e.g. Activities - work, shopping, hobbies, sports. Interests family, media, fashion, food. Opinions themselves, future, politics, culture.
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Changing Life-Style Trends


1) Traditional to Modern 2) Concern for Health and Nutrition 3) Self Orientation.Individual Concerns 4) Conservative to Open 5) More Frugal and Practical life style that reflects concern with Economic factors and a willingness to be more self sufficient 6) ______________________________________ 7) ______________________________________
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8) ______________________________________

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Measuring Life Style Characteristics

1.

By activities, Interests and Opinions (AIO) Wells and Tier Method . Formation of 300 + AIO statements, ask respondents to agree or disagree on a six point scale. e.g. I like to be considered a leader. Then reduce to 22 life style dimensions by use of factor analysis.

2. By Purchase Inventories Describe consumer behavior by their buying activities. (Say) car conscious man is a heavy purchaser of car wax, motor oil, grease etc. This was a study done by Alpert & Gatty There was a study done between light & heavy beer drinking cons. It was found light beer drinking ppl were found to be hard drinkers, outgoing people and such distinct lifestyles
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PERSONALITY
More deep-seated than lifestyle Since personality variables reflect consistent, enduring patterns of behavior

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Personality Theories

PT1: Trait Theory

PT2: Psychoanalytic Theory

PT3: Social Theory


PT4: Self Concept Theory

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PT 1: TRAIT THEORY

Personality is composed of a set of Traits that describe general Response

Predispositions.
AgreeDisagree scale is used Factor Analysis is the technique

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PT 1 : A Edwards Personal Preference Schedule EPPS

It measures 14 personality items such as {achievement, compliance, order}


achievement to rival & surpass others & to do ones best compliance to accept leadership & to follow willingly order to have things arranged & also means things to be organized

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PT 1 : B Gordon Personal Profile GPP

Measures responsibility, ascendancy, emotional stability, sociability {e.g. DRAVID, SOURAV, SACHIN.}

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PT 1 : C Thurstone Temperament Schedule

Measures Dominance, Stability and Impulsiveness

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PT 2: PSYCHOANALYTIC THEORY
1) Stress the unconscious nature of personality as a result of childhood conflict 2) Manifestations of these conflicts determine the adult personality and frequently influence behavior in a manner the adult is not aware of 3) Emphasis on unconscious motives and repressed needs result in a non-empirical approach to personality. 4) In applying FREAUDs theories unconscious motives could be determined only by indirect methods, hence 5) Two Techniques viz. {1} Depth Interviews and {2} Projective Techniques =>{situation, cartoon or set of words given & consumers asked to respond}
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PT 2: PSYCHOANALYTIC THEORY

e.g. Haire project Technique Experiment of 1940 why women reluctant to purchase instant coffee 2 shopping lists 1st regular & 2nd . Instant, Respondents (housewives) asked to project the type of woman most likely to have developed each list. List with instant coffee => lazy & poor planner. Deep - Seated fear out of a concern that their husbands would feel that women were avoiding their traditional role as homemakers. Hence the instant coffee was advertised in family sitying situation with the husbands approval
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p.s. this was later developed as Motivational Research study

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PT 3: SOCIAL THEORY Karen Horny


Freauds disciples shifted due to

1) Social variable {than biological} are more important

2) Conscious motives are more important than unconscious

3) Behavior is most frequently directed to known needs & wants

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KAREN HORNYS THEORY


Personality is developed as an individual learns to cope with basic anxieties, steaming from parent-child relationship. Hence three approaches, two coping with anxieties 1) Compliance. Moving towards people 2) Aggressiveness. Moving against people 3) Detachment. Moving away from people Later COHEN developed CAD scale using thirty five item inventory. COHEN found 1) Compliance type use more soaps, mouthwash, aspirin 2) Aggressiveness type use more cologne, aftershave, deodorant & van Heusen shirts 3) Detachment types use more tea but less beer
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PT 4: SELF CONCEPT THEORY


Individuals have concept of self based on who they think They are and a concept of the ideal self based on who they

think they would like to be.


Q1> consumers are asked to describe how they see themselves as say happy, serious, modern, practical etc

Q2> consumers to tell which of the items describe how they would like to be
{Women who would like to be modern & efficient tend to buy different brands, tend to shop different stores than the warm/attractive woman.}
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Part 2

Individual Consumer concluded

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SELF CONCEPT THEORY


Consumers buy brands that are perceived as similar to their self image, either actual or ideal so that there is congruence between brand image & self image

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