What is Consumer Learning?

Consumer Learning is the process by which individuals acquire the purchase and
consumption knowledge and experience they apply to future related behaviour.
Most of the learning is incidental. Some of it is intentional. Basic elements that
contribute to an understanding of learning are:

1.
2.
3.
4.

Motivation
Cues
Response
Reinforcement

There are 2 theories on how Individuals learn:

1.
2.

Behavioural Theory
Cognitive Theory

Both contribute to an understanding of consumer behaviour.

Behavioural Theorists view learning as observable responses to stimuli, whereas
Cognitive Theorists believe that learning is a function of mental processing.
3 Major Behavioural Learning Theories are :

1.

Classical Conditioning : Includes Repetition, Stimulus generalization and

Stimulus discrimination.
2. Instrumental Conditioning: Instrumental Learning theorists believe that
learning occurs through a trial and error process in which the positive
outcomes in the form of results or desired outcomes lead to repeat
behaviour like Repeat Purchase or Repeat Positive Word of Mouth.
Both positive and negative reinforcement can be used to
encourage the desired behaviour. The timing of repetitions influences how
long the learned material is retained. Learning usually persists longer with

distributed re-inforcement schedule, while mass repetitions produce more

initial learnings.
3. Observational Conditioning or Vicarious Learning:
Cognitive learning theory holds that the kind of learning most characteristics of
humans is PROBLEM SOLVING. Cognitive theorists are concerned with how
information is processes by the human mind: how it is stored, retained, and
retrieved.
Involvement theory proposes that people engage in limited information
processing in situations of low relevance to them and people engage in
extensive information processing in situations of high relevance.
TV is a low involvement medium for learning and print and interactive media
encourage more cognitive information processing.
Measures of consumer learning include recall and recognition tests, cognitive
responses to advertising, and attitudinal and behavioural measures of brand
loyalty.
A basic issue among researchers is whether to define brand loyalty in terms of
consumers behaviours or the consumers attitude towards the brand. Brand
Equity refers to the inherent value a brand name has in the marketplace.
Brand Loyalty consists of both attitudes and actual behaviours toward a brand
and both must be measured. For marketers, the major reasons for
understanding how consumers learn are to teach them that their brand is best
and to develop brand loyalty.
What does your brand mean to your customers? Are they really loyal to your
brand? How do you increase their loyalty?

What is 'Brand Equity'

Brand equity refers to a value premium that a company generates from a product with a
recognizable name, when compared to a generic equivalent. Companies can create
brand equity for their products by making them memorable, easily recognizable, and
superior in quality and reliability. Mass marketing campaigns also help to create brand
equity.

BREAKING DOWN 'Brand Equity'

Brand equity has three basic components: consumer perception, negative or positive
effects, and the resulting value. First and foremost, brand equity is built by consumer
perception, which includes both knowledge and experience with a brand and its products.
The perception that a consumer segment holds about a brand directly results in either
positive or negative effects. If the brand equity is positive, the organization, its products and
its financials can benefit. If the brand equity is negative, the opposite is true.
Finally, these effects can turn into either tangible or intangible value. If the effect is positive,
tangible value is realized as increases in revenue or profits and intangible value is realized
as marketing as awareness or goodwill. If the effects are negative, the tangible or intangible
value is also negative. For example, if consumers are willing to pay more for a generic
product than for a branded one, the brand is said to have negative brand equity. This might
happen if a company has a major product recall or causes a widely publicized
environmental disaster.

General Example of Brand Equity

A general example of a situation where brand equity is important is when a company wants
to expand its product line. If the brand's equity is positive, the company can increase the
likelihood that customers might buy its new product by associating the new product with an
existing, successful brand. For example, if Campbell's releases a new soup, the company is
likely to keep it under the same brand name rather than inventing a new brand. The positive
associations customers already have with Campbell's make the new product more enticing
than if the soup has an unfamiliar brand name.

Specific Example of Brand Equity

Brand equity is a major indicator of company strength and performance, specifically in the
public markets. Often times companies in the same industry or sector compete on brand
equity. For example, an EquiTrend survey conducted on July 14, 2016, found that The
Home Depot was the number one hardware company in terms of brand equity. Lowe's
Companies, Inc. came in second, with The Ace Hardware Corporation scoring below
average.
A large component of brand equity in the hardware environment is consumer perception of
the strength of a company's ecommerce business. The Home Depot is an industry leader in
this category. It was also found that, in addition to ecommerce, The Home Depot has the
highest familiarity among consumers, allowing it to further penetrate the industry and
increase its brand equity.

What is 'Brand Loyalty'

Brand loyalty is a pattern of consumer behavior where consumers become committed
to brands and make repeat purchases from the same brands over time.
Loyal customers consistently purchase products from their preferred brands, regardless of
convenience or price. Companies often use different marketing strategies to cultivate loyal
customer, including loyalty programs(i.e. rewards programs) or trials and incentives (such as
samples and free gifts).

BREAKING DOWN 'Brand Loyalty'

Companies that successfully cultivate loyal customers sometimes work with brand
ambassadors, consumers who market the brand and communicate with it positively about it
among their friends both online and in real time. This is free word-of-mouth marketing for
the company and is often an effective way of building brand loyalty.
In a competitive marketplace, brands need to maintain continuous meaningful engagement
in order to identify consumer needs and expectations. Brands are most successful when
they address emotional values that are important to their target customers. When the value
identification is correct, it leads to more customer engagement and higher numbers of
repeat customers. High repeat customer rates lead to higher profits for brands.

Consumer Trends
Companies strive to deliver what consumers want by discovering the gap between their
brands and customer ideals. If a product is less than ideal, customers may move on to a
different brand. Product innovation is important for brand loyalty, but it is not enough to
create a product or a series of products that offer solutions to consumer needs. Ongoing
research is needed to find out not only how customers use the branded products but what
features are missing. When brands don't pay attention to user trends, they lose their
competitive edge. Eastman Kodak Co. (NYSE: KODK) and Sears Holdings Corporation
(NASDAQ: SHLD) are examples of former, as these companies were leading brands that
are no longer significant players in their fields in 2016. These brands lost a significant
market share because they did not respond to consumer trends.

The Internet Factor

The internet plays a huge role in shaping consumer trends and presents an ongoing
challenge for brands. In the internet age, most consumers do not have loyalty to any given
brand. Instead, consumers can easily access a plethora of information online to help them
make buying decisions based on a variety of factors. Some online retailers like Amazon.com
Inc. (NASDAQ: AMZN) have user reviews on the product listing page so that consumers can
learn about product features and get brand recommendations from other users. With the
wealth of information available, some people switch brands simply to experience different
features. In the smartphone and tablet market, for example, many consumers try products
from several different brands instead of remaining loyal to any one brand of device.
REFERENCE GROUP :

A reference group is the group whose perspective an individual takes on in forming

values, beliefs, attitudes, opinions, and overt behaviors. One considers this group as a
point of reference when evaluating how they view their own existence in the world.
Reference groups can be very small (just a few close friends) or fairly large (a sports
team fan club or even a political party). For example, an aspiring politician may choose
her clothing carefully so as to gain the respect of her political party. Reference groups
influence consumer behavior in two ways. First, they set levels of aspiration, offering
cues of what lifestyle and related purchasing patterns we should strive to achieve.
Second, they help define the actual items/services considered acceptable for displaying
those aspirationsthe kind of housing, clothing, or car, for example, deemed
appropriate for a member of the group. [1] Research has also suggested that the
reference group can also be a deterrent to innovation and innovative
behaviors. [2] Figure 11.1 Reference Group and Social Influence provides an overview of
reference group influences and the ways in which they affect behavior. This is a useful
point of reference as you read the remainder of the chapter. Nowadays those reference
groups can exist in both our physical and digital worlds. We have seen the explosion of
online realities in such places as Facebook and MySecondLife, which, though digital,
bring with them almost all the elements that exist in a physical reference group world.
In our daily lives, we all get influenced by a variety of people while making
our purchase decisions. We, as humans do a lot to try to impress others.
We make purchase to get compliments and try that others should not think
less of us.
A reference group is the group whose perspective we consider. Now our
reference could be very large or very small including few of our family
members or few close friends. Reference groups influence people a lot in

their buying decisions. They set the levels of lifestyle, purchasing patterns,
etc.
Reference groups are of two types

Primary Groups

Secondary Groups

Primary Groups
Primary reference groups are basically the set of people whom you meet
every day. They can be from your family, your close friends, your
roommates, etc.
These people from primary groups may have a direct and strong impact in
your lives and your buying decisions since they are very significant to you.
Primary groups make you comfortable and give you a feeling that they are
with you when you are confused about a purchase. These people give you
very honest and clear advices as they are so close to you, due to which you
could be more confident about the purchase. Research shows that the bond
between people leads people to be effectively social and as satisfied
consumers.

Secondary Groups
Secondary reference groups are usually formal and they speak less
frequently. They might be professionals, your collogues, your seniors at
work or your acquaintance at club, etc.
In secondary reference groups the power to influence people is quite less as
compared to primary reference groups as people in these groups are not
that comfortable in sharing their thoughts or views on the purchase.
Lets have a look at few more reference groups

Aspirational Group

Aspirational group is the one to which a person may want to become part
of. They currently are not part of that group but wish to become and get
with that group. For doing the same, they try to dress, talk, act and even
think the way the members of that group do.
For example, people who like Madhuri Dixit wish to become like her and
meet her and so start purchasing and using all those products that she
endorses.

Dissociative Group
The people in these groups are totally opposite to the people in the
aspirational group. Here people deny of becoming or getting connected to a
particular group. They just hate being related to that group.
For example, if people dont like a particular community, they would never
like being connected to them. So they would try all the possible ways to
avoid the way in which they dress, think or act.
Thus marketers need to understand the likes and dislikes of the consumers
and also the groups to which they belong. Marketers should recognize the
extent to which a reference group influences the consumer and he should
also understand out of all the groups which group influences him the most.

Family
Family of a consumer plays an important role in the decision making
process. The parents, siblings, relatives all have their own views about a
particular purchase.
Following are the roles in the family decision making process

Influencers Influencers are the ones who give ideas or information about the
product or service to the consumer.

Gate Keepers Gatekeepers are the family members who usually panel the
information. They can be our parents or siblings too who can in any form
provide us the information about the product.

Decision Makers Family or our parents who usually have the power to take
decisions on our behalf are the decision makers. After the complete the research
they may decide to purchase the particular or dispose it.

Buyers Buyer is the one who actually makes the purchase of the product.

End Users The person who finally uses the product or consumes the service
is the ultimate consumer also called as End user as per the context.

A consumer gets influenced by his family members as well as friends. Since

childhood the culture which he follows or the rituals which he observes and
the moral values and the religious principles he usually receives them from
his family. However, the individual learns fashion, attitude or style from his
friends. All these attributes or traits together influence the buyers decision
making.

Influence of Culture on consumer behavior

Consumer behavior is largely dependent on cultural factors consisting of mutually shared operating
procedures, unstated assumptions, tools, norms, values, standards for perceiving, believing,
evaluating, and communicating. Cultural factors vary by country but become increasingly complex
when people immigrate to foreign countries that have different cultural dimensions. In these
situations, people are subjected to a wide variety of cultural reference groups that ultimately affect
their purchase behavior. In addition, reference groups may consist of familial groups or external peer
groups with each group providing specific and often conflicting information that affects purchase and
consumption behavior .In response, marketers must develop marketing communication that
addresses cultural and reference group factors from both a domestic and global perspective. To this
end, marketers use market segmentation and micromarketing to develop customer-centric marketing
messages with the goal of providing precisely defined marketing messages that satisfy consumers
need for personal information regarding products and services so that consumers should be
adequately stimulated to purchase the product or service being advertised.
We define culture as the sum total of learned beliefs, values, and customs that serve to direct the
consumer behavior of members of a particular society(Consumer Behavior, Shiffman and Kanuk)In a

broad sense both values and beliefs are mental images that effect a wide range of specific attitudes
that, in turn, influence the way a person uses to evaluate alternative brands in a product category
(such as Volvo versus an Audi automobile), or his or her eventual preference for one of these brands
over the other, are influenced by both a persons general values (perceptions as to what constitutes
quality and the meaning of country of origin) and specific beliefs(particular, perceptions about the
quality of Swedish made versus German made automobiles)In contrast to beliefs and values,
customs are usual and acceptable ways of behaving, where the former are guides for behavior .E.g.Consumers routine behavior, such as adding a diet sweetener to coffee, putting ketchup on
scrambled eggs etc