Consumer Behaviur

Study Material – Consumer Behavior
COURSE MATERIAL
Department : Management Studies
Academic Year : 2010 – 2011
Trimester : Fourth Trimester
Subject Code : MBA M0901
Subject : Consumer Behavior
Name of the Faculty : K.SENTHIL
Designation : Sr. Lecturer
Note:- This will be only a guideline not a study material
Prepared by : K.Senthil, Chettinad College of Engineering & Technology


Consumer Behavior
Unit – 1
Introduction:
Businesses stay in business by attracting and retaining customers. They do this by

engaging in exchanges of resources including information, money, goods, services,
status, and emotions with consumers, exchanges that both businesses and customers
perceive to be beneficial. When companies ask, who are our customers? How do we
reach them? What should we sell to them? What will motivate them to buy? What makes
them satisfied? They are asking questions that require sophisticated understanding of
consumer behaviour. This unit provides a brief insight into the meaning and perspective
of Consumer behaviour as well as understanding why it is important to study consumers.
The term consumer behavior is defined as the behavior that consumer display in
searching for purchasing, using, evaluating and disposing of product and services that
they expect will satisfy their needs. Consumer behavior focuses on how individuals make
decisions to spend their available resources (time, money, effort) on consumption related
items. This includes what they buy, why they buy it, when they buy it, where they buy it,
how often they buy it, how often they use it, how they evaluate it after the purchase and
the impact of such evaluation on future, and how they dispose of it.
In another words, consumer behavior can be define as the behavior of individuals
in regards to acquiring, using, and disposing of products, services, ideas or experiences.
Consumer behavior also includes the acquisition and use of information. Thus,
communication with consumers and receiving feedback for them is a crucial part of
consumer behavior which is of great interest to marketers
American Marketing Association defines consumer behavior as “the dynamic
interaction of affect and cognition, behavior and the environment by which human beings
conduct the exchange aspects of their lives”
The Dictionary of Marketing and Advertising defines consumer Behaviour as
“Observable activities chosen to maximize satisfaction through the attainment of
economic goods and services such as choice of retail outlet, preference for particular
brands and so on”.

According to Loudon and Della Bitta, Consumer Behaviour is “ the decision

process and physical activity of individuals engage in evaluating, acquiring, using, or
disposing of goods and services.”
According to Schiffman and Kanuck, the term consumer Behaviour refers to
“the behaviour that consumers display in searching for, purchasing, using, evaluating,
and disposing of products and services that they expect will satisfy their needs” and the
study of Consumer behaviour is the study of how individuals make decisions to spend
their available resources – like time, money, and effort – on consumption related items.
It is important to recognize from this definitions that consumer behavior is
dynamic, involves interactions and involves exchanges.
CONCEPTS AND COMPONENTS OF CONSUMER BEHAVIOUR

To succeed in the market the marketer must have a through knowledge on
organization’s own capabilities, the capabilities of current and future competitors, the
consumption process of potential customers, and the environment such as economic,
physical and technological which interact with these concepts.
1. Consumer
2. Company
3. Competitors
4. Conditions
1. CONSUMER: It is not possible to anticipate and react to customers needs and desires
without a complete understanding of consumer behavior. Discovering customers’ current
needs is a complex process. But it can generally be accomplished by direct marketing
research.
2. COMPANY : A firm must fully understand its own ability to meet customer needs.
This involves evaluating all aspects of the firm, including its financial conditions,
general managerial skills, production capabilities, research and development capabilities,
technological sophistication, reputation, and marketing skills.
Marketing skills would include new product development capabilities, channel
strength, advertising abilities, service capabilities, marketing research abilities, market
and consumer knowledge and so forth.

3. COMPETITOR: It is not possible to consistently do a better job of meeting

customer needs than the competition without a thorough understanding of the
competitors’ capabilities and strengths. This requires the same level of knowledge of a
firm’s key competitors that is required of one’s own firm.
4. CONDITIONS: The state of the economy, the physical environment, government
regulations, and technological developments affect consumer needs and expectations as
well as company and competitor capabilities. The deterioration of the physical
environment has produced not only consumer demand for environmentally sound
products but also government regulations affecting product design and manufacturing.
SIGNIFICANCE OF CONSUMER BEHAVIOUR:

The study of consumers helps firms and organizations to improve their marketing
strategies by understanding issues such as
 How consumers think, feel, reason, and select between different alternatives (e.g.,
brands, products);
 How the consumer is influenced by his or her environment (e.g., culture, family,
signs, media);
 How consumer behave while shopping or making other marketing decisions;
 How the consumer knowledge or information processing abilities will influence
decisions and marketing outcome;
 How consumer motivation and decision strategies differ between products and to
measure the level of importance or interest on the difference; and
 How marketers can adapt and improve their marketing campaigns and marketing
strategies to more effectively reach the consumer.
DIMENSIONS OF CONSUMER BEHAVIOR:
Consumers vary tremendously in their ages, incomes, education level, mobility
pattern, tastes and preferences. Around two decades ago, it was seen that their economic
and mental forces govern consumer purchase decision. But now, consumer behavior can
be said to be the melding of all those bodies of knowledge concerning with human
behavior – behavioral sciences.

THREE DIMENSIONS OF CB FROM CONSUMER’S PERSPECTIVE

1. Consumers are interested in evaluating information in light of their own needs. They
view information as a vehicle for making better choices.
2. Consumers often view an individual product as part of a larger constellation that
reflects their lifestyles.
3. In consumers view competition as an opportunity to gain additional alternatives,
frequently at lower prices.
THREE DIMENSIONS OF CB FROM MARKETER’S PERSPECTIVE

1. The manufacturer or marketers are profit motive. Managers have a vested interest in
presenting their products in the best light possible.
2. The marketers are product specific. Managers introduce, price, advertise, and distribute
individual brands. Consumers must make decisions across a range of brand alternatives.
3. In Marketers view Competition as a threat.
NEED FOR STUDYING CONSUMER BEHAVIOUR

1. Consumers do not always act or react, as the theory would suggest.
2. Consumer preferences are changing and become highly diversified.
3. Consumer research has vividly pointed out that consumers dislike using identical
products and prefer differentiated products.
4. Meeting of special needs of customers’ requirement market segmentation.
5. Rapid Introduction of new products with technological advancement has made the
job of studying consumer behavior more imperative.
6. Consumer behavior can be used to sell products that might not sell easily.
THEORIES OF CONSUMER BEHAVIOUR

1. ECONOMIC THEORIES :-
 Law of Diminishing Marginal Utility
 Indifference curve analysis
2. LEARNING THEORY
 Stimulus Response theory

 Classical Conditioning & Operant Conditioning

3. PERSONALITY THEORIES
 Freudian Theory
 Trait & Factor Theories
4. MOTIVATION THEORY
 Maslow’s Theory of Motivation
DISCIPLINES HAVING INFLUENCE ON CONSUMER BEHAVIOR
S.NO DISCIPLINES COMPRISING OF (OR) GOVERNED BY

01 Economics Demand, supply, Income, Purchasing Power.
Needs & Motivation, Personality, (Visualizer,
02. Psychology
Verbalizers) Perception, Learning and Attitudes.
Society, Social class, Power, Esteem, Status.
(authority, power, occupation, education, learning,
03. Sociology
wisdom, public service, morality, status, associational
ties and connections
Group Behaviour, Conformity to group norms, Group
04. Socio Psychology
influences, Role leader, Values, Belief, Caste system.
05. Cultural Anthropology Attitude towards wealth, Joint family system.
APPLICATION OF CB KNOWLEDGE IN MARKETING DECISIONS:

Consumer behaviour is complex, dynamic, multidimensional process, and all
marketing decisions are based on assumptions about consumer behaviour.
Marketing Decisions are the game plan which the firms must adhere to, in order
to outdo the competitor or the plans to achieve the desired objective with the help of CB
knowledge.
MARKETING DECISIONS WITH THE KNOWLEDGE OF CONSUMER
BEHAVIOUR
( I ) MARKETING ANALYSIS
 Consumer
 Company
 Competition

 Condition
( II ) MARKETING SEGMENTATION
 Identify product related needs
 Group customers with similar need sets
 Describe each group
 Select Target market
( III ) MARKETING STRATEGY
 Product
 Price
 Distribution
 Communication
 Service
( IV ) CONSUMER DECISION PROCESS
 Problem recognition
 Information Search – Internal, External
 Alternative Evaluation
 Purchase
 Use
 Evaluation
( V ) OUTCOMES
 Customer Satisfaction
 Sales
 Product / Brand Image
APPROACHES TO THE STUDY OF CONSUMER BEHAVIOUR

The person who purchases a product is not always the user or only user of the
product. So the marketers have to identify the person who is most likely to influence the
decision – the buyer or user and direct their promotional efforts accordingly.

Marketer Approach: It is important to understand or predict how consumers are likely

to react to various informational and environmental cues and devise marketing strategies
accordingly. This will help to earn competitive advantage at the market place.
Human Behavior scholars approach: Gain insights into why individuals act in certain
consumption related ways and also in learning about the internal and external influences
which impel the consumers to act as they do.
Classical Approach: Consumer behaviour were based on economic theory, on the
perspective that individuals act rationally to maximize their benefits on their purchase of
goods and services and select only those which will give the highest utility at the lowest
cost.
Neo – Classical Approach: The study of consumer behavior from the perspective of
understanding consumer behavior and the meanings behind such behavior is
called Interpretive. Some times this is referred as post modernism.
Modernist approach or Perspective approach: The consumer behavior discipline was
considered to be an applied market science. That is if they could predict consumer
behavior, they could influence it. This approach came to known as positivism and such
consumer behavior researchers came to be known as positivists.
GENERAL APPROACHES TO THE STUDY OF CB:
APPROACHES CORE PRIMARY PRIMARY

DISCIPLINE OBJECTIVE METHODS
Cultural & Understand consumption Long interviews ,
Interpretive
Anthropology and its meanings Focus Groups
Explain consumer
Psychology, Experiment
Traditional decision making and
Sociology surveys.
behavior
Economics Predict consumer choice Math – Modeling

Marketing Science
Statistics and behavior situation.
SEGMENTS OF CONSUMERS
 EXPLORERS
 PIONEERS
 SKEPTICS

 PARANOIDS
 LAGGARDS
1. EXPLORERS
a) They are open to embracing the newest of technologies.
b) They are the first ones to be attracted to new technologies.
c) For them, technology is a source of mental stimulation
d) They believe that technology provides them freedom, control and efficiency.
e) They are thought leaders and become a source of information for their friends.
2. PIONEERS
a) They are open to trying new technologies but suffer from some degree of
insecurity.
b) They need some degree of assistance and guidance from the organisation during
their use of new technology.
c) They understand the benefits of technology and want the best and the latest.
d) They are also young; some of them work in technology professions.
e) Most of them have an incidence of computer use in their jobs.
3. SKEPTICS
a) Rank low on motivators but do not have any inhibitions about adopting
technology.
b) They will not be excited about new technology.
c) They wait to see the results of a new technology.
d) They have very low optimism and very low innovativeness.
4. PARANOIDS
a) They are attracted by technology but their insecurity and discomfort levels inhibit
them.
b) They need a little convincing from the marketers to adopt new technology.
c) They also enjoy technology and believe that it increases their efficiency.
d) They might be described as struggling middle class.
e) Most of them are females and not very affluent.
f) They will not take any initiative until they are sure that there are no risks.

5. LAGGARDS
a) Wait for others to adopt technology, and would try only when they convinced
about the benefits.
b) They completely lack faith in technology and not convinced about the benefits of
technology.
c) Most of the laggards are older in age and are in tired.
d) Therefore, efficiency and extended working hours do not attract them.
CUSTOMER
C – COMPANY
U – UTILITY
S – SATISFACTION
T- TECHNOLOGY
O– OPTIONS
M – MONETARY ASPECTS
E – EVALUATION
R – RESPONSE (By Buying / Not buying)

UNIT – 2
CONSUMER BEHAVIOR MODELS
INDUSTIRAL CONSUMER BEHAVIOUR MODELS

1. Nicosia Model
2. A Model of Industrial buying behavior
3. Webster and Wind Model of Industrial consumer behavior.
1. NICOSIA MODEL OF INDUSTRIAL CONSUMER BEHAVIOUR
This model explains Consumer Behavior on the basis of four fields shown in the
diagram.
• Field 1 - Message Exposure
• Field 2 - Search Evaluation
• Field 3 - Act Of Purchase
• Field 4 - Feedback & Experience
 Sub Field 1 - Firm’s Attributes
 Sub Field 2 - Consumer Attributes
 Field 1 consists of subfields one and two.
Subfield 1 is the firm’s attributes and attributes of the product.
Subfield 2 is the predisposition of the consumer and his own characteristics and
attributes
 Field 2 is the pre action field, where the consumer goes on for
research and evaluation and gets motivated to buy the product. It highlights the means
and end relationship.
 Field 3 is the act of purchase or the decision – making to buy the
product. The customer buys the product and uses it.
 Field 4 highlights the post purchase behavior and the use of the
product, its storage and consumption.
The feedback from Field 4 is fed into the firms’ attributes or field 1, and the
feedback from the experience is responsible for changing the pre – disposition of the
consumer and later his attitude towards the product.

In general, Nicosia Model is a comprehensive model of dealing with all aspects of

building attitudes, purchase and use of product including the post purchase behavior of
the consumer.
NICOSIA MODEL OF CONSUM
Sub Field 1
Firm’s Attributes
2. A MODEL OF INDUSTRIAL BUYER BEHAVIOUR

Three main features in this model:
1. Different individuals with different psychological makeup.
2. Conditions leading to joint decision -making.
3. Differences of opinion on purchases or conflicts to reach a decision.
The persons involved in the decision making are from quality control,
Field 4
Experience
manufacturing, finance, research and development and other possible areas. These may
be named as purchase agents, engineers, and users, as referred to in the model.
This constitutes a purchasing committee:
( 1a ) . Different backgrounds
( 1b ) . Different information sources
( 1c ) . Undertake active research
( 1d ) . Perceptual distortion Consumption Storage
( 1e ) . Satisfaction with past purchase.

Field 4
(2a)Product specific factors :

1. Perceived risk – with higher risks joint decisions are favored.
2. Type of purchase – heavy investments are made through joint decision. Less costly
purchase decisions are made independently.
3. Time pressure - if goods are urgently required, individual decisions are favored.
(2b) Company specific factors :

1. Size of the organization
2. Organization orientation
(3)Resolution of buying decision conflicts

 Problem Solving
 Persuasion
 Bargaining
 Politicking
(4) Influence of Situational Factors.

 Inflation
 Recession or Boom
 Price Contracts
 Rationing Foreign Trade
 Strikes or Lockouts
 Organizational change such as a Merger, Acquisition change of key personnel etc.,

3. Webster and Wind Model of Industrial Consumer Behaviour

 A somewhat more comprehensive model of the organizational
buyer decision making process has been developed by Webster and Wind.
 According to their views a buying situation is created when
some member of the organization perceives a problem that can be solved through
purchasing action.
 In response to a buying situation, a buying center is created by
the organization, consisting of those members of the organization who will be
involved in the buying decision process.
 According to this model the buying center consists of five
buying roles, Users, deciders, Influencers, Buyers and Gatekeepers.

 Each members of the buying center is likely to have unique

expectations, perceptions and objectives, as a function of his role in the organization.
MAJOR INFLUENCERS
1. Environmental Determinants
 Physical Environment – Supplier, Customer
 Technological Environment - Information about supplier’s
marketing communication
 Economic Environment - Availability of goods and services
 Political Environment- Government, Labour Unions, Trade
Associations
 Legal Environment - Professional groups, Other social
Institutions & Other Business Firms
 Cultural Environment - General Business Conditions & Values
and Norms
2. Organizational Determinants
Organizational Climate
Organizational Structure
Organizational Technology
Organizational Goals and Tasks
3. Buying Center
Buying group structure
Group task
Members and leader of the buying center
Member characteristics and goals
Group process through task, activities, Interaction and sentiments
4. Individual participants
Motivation
Cognitive Structure
Personality
Learning process

Perceived Roles
By this way at last the Industrial buying process can be decided either by
Individual Decision making unit, or by Group decision making unit.
INDIVIDUAL CONSUMER DECISION MAKING MODELS

1. Economic Model
2. Psychological Model
3. Pavlovian Model
4. Input , Process ,Output Model
5. Sociological Model
6. Howarth Sheth Model

7. Engel - Blackwell - Kollat Model

8. Model of Family decision making
1. ECONOMIC MODEL
PRICE EFFECT - Lesser the price of the product more will be the quantity purchased.
SUBSTITUTION EFFECT - Lesser the price of the substitute product, lesser will be
the utility of the original product bought.
INCOME EFFECT - When more income is earned, or more money is available, more
will be the quantity purchased.
2. PSYCHOLOGICAL MODEL
PSYCHOLOGIC
3. PAVLOVIAN LEARNING MODEL
5. Self actualization: se
• DRIVE - Strong internal stimuli. It stimulates a person to fulfill his desires.
4egoneeds: prestige, status, succes
• CUES - Weak stimuli. It determines when the buyer will respond.
Triggering Cues: activate decision process.
b) Non triggering cues: Influence the decision process, but do not activate it.
1. Product cues
3. Social needs: affection, friendship,
2. Informational cues
2. S afetyandsecurityneeds; protectio
c) Reinforcement : Marketer try to create a good image of the product in the mind of
the consumer for repeat purchases through learning.
4. INPUT, PROCESS AND OUTPUT MODEL
1.Physiological needs; food, wa

INPUT, PROCESS
PER
5. BUYERS BLACKBOX MODEL
• MBUYER
NES
ED BLAC
RECOGNITION
FIRM ’S O
MARKE T
TING I
EFFORT V
A
T PRODUCT
MARKETING I AWA
OTR
HEE
RNESS
SOCIALSTIMULI O STIMULI
6. SOCIOLOGICAL MODEL
ENVIRO N BUY
£ A consumer is a part of the society.
NMENT R
£ PR
His ODU
buying CT is influenced by groups. ECONOMICAL
behavior
£ PRICE
Primary CUL
groups : family members, relatives close TURAL
associates CU
PROMOTION TECHNO
£ Secondary groups: member of a political party, dress norms are different.
PRICE LOGICAL
PO
£ As a member of an elite organization, his dress LITICALmay be different.
requirements
7. HOWRATH SHETH MODEL PE
• The decision making model is applicable to individuals.
PSY
• It has four sets of variables.
First set: Input

(a) Significative stimuli - Physical tangible characteristics, price , quality,

distinctiveness services rendered , and availability of the product .
(b) Symbolic stimuli -
o Same as significative.
o But include the perception of the individual.
o Price is high or low
o Quality is up to the mark or below average.
o How quickly or easily is the product available.
(c) Social stimuli - Provided by family, friends, social groups, and social class.
Second set - Perceptual and learning constructs
Psychological variables - motives, attitudes, & perception.
Third set - out put
Purchase decision - after purchase - satisfaction - positive attitude -
increase brand comprehension. Vice versa
Fourth set - Exogenous or External variables:
Personality traits, social class, importance of purchase, final status
HOWARTH - SHETH
INPUTS
OUTPUTS
STIMULUS
DISPLAY
PHYSICAL SIGNIFICATIVE
STIMULI O
TANGIBLE SE
PRICEPAID QUALITY
PRICE
DISTINCTIV
-ENESS
8. ENGEL - BLACKWELL - KOLLAT MODEL

 IT CONSISTS OF FOUR COMPONENTS :
1. Information processing
2. Central control unit
3. Decision process
4. Environmental influences.
 INFORMATION PROCESSING :
(A). Exposure
(b). Attention
(c). Comprehension
(d). Retention of the marketing and non - marketing stimuli.
9. MODEL OF FAMILY DECISION - MAKING

How The Family Members Interact With Each Other In The Context Of Their
Decision Making.
Different Consumption Role:
1. Influencers 3. Deciders 5. Preparers
2. Gate Keepers 4. Buyers 6. User

Implications of the models in marketing decisions:

Over the years several models have been put forward with the intention of
explaining individual buying behavior and industrial buying behavior. This various
models help the marketer to derive a solution to their market problem.
The individual consumer behavior models show the influence of family members
during purchase. So, the marketer must target the not only the specific target category,
but also the entire family member of the specific family.
As like as in industrial consumer behavior models, the company may forced by its
competitors and customers indirectly to manufacture the product, to modify, to formulate,
the production strategies.

UNIT- III
CONSUMER BEHAVIOUR INTERNAL INFLUENCES

CONSUMER NEED & MOTIVES
The role of Needs and Motives in Consumer Behaviour is very important.
Because every consumer wants to purchase any item only by his needs and desires. That
needs and desires are clearly formulated by some external motivating factors like, film,
advertisement etc.
NEEDS :
Needs can be said to be a state of felt deprivation in a person. That is needs are a
basic part of human make – up.
CHARACTERISTICS OF NEED:
 Needs are never fully satisfied.
 New needs emerge as old needs are fully satisfied.
 The nature and persistence of an individual’s behaviour are often influenced by
the success and failure in satisfying the needs and reaching the goal.
 Substitute goals, on account of defensive reaction from an individual may
influence need negatively.
 Needs and goals vary among individuals.
TYPES OF NEEDS:
1. Biogenic Needs – Need for air, water, and sunlight are called as biogenic.
Because they can be physical.
2. Psychogenic Needs – Need of food, shelter, cloth is called psychogenic. Ex:
Becoming a member of a particular society, (or) accumulate wealth for
daughter’s marriage is very high psychogenic need.
3. Utilitarian or Hedonic Needs – This needs implies that consumers will
emphasize the “Objective” and “ Tangible” quality of the products. Product
satisfying hedonic need can be an efficient washing machine, a dishwasher, a
fuel-efficient car. Etc. They also try to satisfy the consumer’s dreams, fantasies
and build up self-confidence.
(Ex: Eureka Vacuum Cleaner, Pillsbury chalky fresh atta, Sun drop edible oil)

Concept of Motivation and Motives

Motivation may be defined as psychological forces that determine the direction of
person’s behaviour, a person’s level of effort, and a person’s level of persistence in the
face of obstacles. In another words, motivation is the process that account for an
individual intensity, direction, and persistence of effort towards attaining a goal.
Motivation is the reason for behavior. A motive is a construct representing an
unobservable inner force that stimulates and compels a behavioral response and provides
specific direction to that response. A motive is why an individual does something.
Theory of Motivation
There are numerous theories of motivation, and many of them offer useful
insights for the marketing manager. This section describes Maslow’s motive hierarchy
approach to understanding consumer motivation. Abraham Maslow organized five major
types of human needs into a hierarchy. The need hierarchy illustrates maslow’s
conception of people satisfying their needs in a specified order, from bottom to top. The
need, in ascending order are; physiological needs (Food, Water, Sex and Shelter), Safety
needs (Protection against threat and deprivation), Belongingness needs (Friendship,
Affection, Affiliation and Love), Esteem needs (Independence, Achievement,
recognition, Self respect, Accomplishment and Freedom), Self-Actualization (Realizing
one’s full potential or Self Fulfillment).
Maslow’s hierarchy of needs approach is based on four premises
 All human acquire a similar set of motives through genetic endowment and
social interaction.
 Some motive are more basic or critical than others
 The more basic motives must be satisfied to a minimum level before other
motives are activated
 As the basic motive become satisfied, more advanced motives come into
play.
Marketing Strategy and Maslow’s Motive Hierarchy
1. PHYSIOLOGICAL: Food, water, sleeps, and, to an extent, sex, are
physiological motives.

Product Health foods, medicines, sports drinks, low-cholesterol foods, and

exercise equipment.
2. SAFETY: Seeking physical safety and security, stability, familiar surroundings,
and so forth are manifestations of safety needs.
Product: Smoke detectors, preventive medicines, insurance, retirement
investments, seat belts, burglar alarms, and sunscreen.
3. BELONGINGNESS: Belongingness motives are reflected in a desire for love,
friendship, affiliation, and group acceptance
Products: Personal grooming, foods, entertainment, clothing, and many others.
4. ESTEEM: Desires for, superiority, self-respect, and prestige are examples of
esteem needs. The needs relate to the individual’s feelings of usefulness and
accomplishment.
Products Clothing, furniture, liquors, hobbies, stores, and cars amongst others.
5. SELF-ACTUALIZATION: This involves the desire for self fulfillment, to
become all that one is capable of becoming.
Products: Education, hobbies, sports, some vacations, museums.
Classifications of Motives
McGuire has developed a motive classification system that is more specific in
understanding consumer behaviour. McGuire’s motives that are of most use to marketing
are briefly described in the following sections.
Need for Consistency: A basic desire is to have all facets or parts of one consistent with
each other. These facets include attitudes, behaviors, opinions, self-images, views of
others, and so forth. Marketers use this in several ways. First, it makes clear the need for
a consistent marketing mix. The second area of marketing interest with consistency is
called cognitive dissonance. This refers to a tendency of consumers to worry about the
wisdom of major purchases after they have been made. Often making a major purchase is
not consistent with the need to save money or to make other purchase.
Need to Attribute Causation: This set of motives deals with our need to determine who
or what causes the things that happen to us. Do we attribute the cause of a favorable or

unfavorable outcome to ourselves or to some outside force? Attributing cause is part of

the foundation for the use of rhetorical theory to understand consumers’ responses to
persuasive messages.
Need to Categorize: we have a need to categorize and organize information and
experiences in some meaningful yet manageable way. So we establish categories or
mental partitions that allow us to process large quantities of information.
Need for Cues: These motives reflect needs for observable cues or symbols that enable
us to infer what we feel and know. Impressions, feelings, and attitudes are subtly
established by viewing our own behavior and that of others and drawing inferences as to
what we feel and think. In many instances, clothing plays an important role in presenting
the subtle meaning of a desired image and consumer lifestyle.
Need for Independence: The need for independence and individuality is a characteristic
of some culture. It is likely that all individuals in all cultures have this need at some level.
Americans are taught that it is proper and even essential to express and fulfill this need.
In contrast, in countries such as Japan, fulfillment of this need is discouraged, while
fulfillment of the need for affiliation is socially acceptable. Owning or using products and
services that are unique is one way consumers express their independence.
Need for Self-Expression: This motive deals with the need to express one’s identity to
others. We feel the need to let others know by our actions (which include the purchase
and display of goods) who we are and what we are. The purchase of many products such
as clothing and automobiles allows consumers to express their identity to others, since
these products have symbolic or expressive meanings.
Need for Ego-Defense: The need to defend our identities or egos is another important
motive. When our identity is threatened, we are motivated to protect our self-concept and
utilize defensive behaviors and attitudes. Many products can provide ego-defense. A
consumer who feels insecure may rely on well-known brands for socially visible products
to avoid any chance of making a socially incorrect purchase.
Need for Reinforcement: We are often motivated to act in certain ways because we are
rewarded for doing so. Products designed to be used in public situations (clothing,
furniture, and artwork) are frequently sold on the basis of the amount and type of
reinforcement that will be received.

Need for Affiliation: Affiliation is the need to develop mutually helpful and satisfying
relationship with others. Marketers frequently use such affiliation-based themes as “Your
kids will love you for it” in advertisements.
Need for Modeling: The need for modeling reflects a tendency to base behavior on that
of others. Modeling is a major means by which children learn to become consumers. The
tendency to model explains some of the conformity that occurs within reference groups.
Marketers utilize this motive by showing desirable types of individuals using their
brands.
Need for Novelty: We often seek variety and difference simply out of a need for novelty.
Marketers refer to the outcome of this motive as variety-seeking behavior. This may be a
prime reason for brand switching and some so-called impulse purchasing. The need for
novelty is curvilinear and changes over time. That is, individuals experiencing rapid
change generally become satiated and desire stability, while individuals in stable
environments become “bored” and desire change.
Need for Assertion: The need for assertion reflects a consumer’s need for engaging in
those types of activities that will bring about an increase in self-esteem as well as esteem
in the eyes of others. Individuals with a strong need for assertion are more likely to
complain when dissatisfied with a purchase.
Role of Motives
The role of motives is to arouse and direct the behavior of consumers. The arousal
component activates bodily energy so that it can be used for mental and physical activity.
In their directive role, motives have several important functions for guiding behavior.
These are discussed below:
Defining Basic Strivings: Motives influence consumers to develop and identify their
basic strivings. Included among basic strivings are very general goals such as safety,
affiliation, achievement, or other desired states which consumers seek to achieve. They
serve to guide behavior in a general way across a wide variety of decisions and activities.
Identifying Goal Objects: Although there are exceptions, people often view products or
services as means by which they can satisfy their motives. In fact, consumers often go
one step further and think of products as their actual goals, without realizing that they

actually represent ways of satisfying motives. This motivational push that influences
consumers to identify products as goal objects is of great interest to marketers,
particularly since it appears that it can be influenced. Certainly, the features designed into
a product can affect the degree to which consumers may accept it as a goal or means for
achieving some goal.
Influencing Choice Criteria: Motives also guide consumers in developing criteria for
evaluating products. Thus, for a car buyer strongly influenced by the convenience motive,
features such as electronic speed control and automatic driver-seat adjustments would
become more important choice criteria than would style or mileage.
Directing Other Influences: Motives affect the individual determinants of perception,
learning, personality, attitudes, and how people process information. This also results in
directional influences on behavior. For example, motives influence information
processing, which in turn regulates how we interpret and respond to our environment.
Motives Arousal
A variety of mechanisms can trigger the arousal of motivates and energize
consumers. The following may work alone or in combination to activate behavior.
Physiological Conditions: This source of arousal acts to satisfy our biological needs for
food, water, and other life-sustaining necessities. Depriving such a bodily need generates
an uncomfortable state of tension. When this tension is sufficiently strong, arousal occurs
to provide energy necessary to satisfy the need. The consumer’s previous experience and
present situation will strongly influence the directions any heightened activity will take.
Cognitive Activity: Humans engage in considerable cognitive activity (thinking and
reasoning) even when the objects of their thoughts are not physically present. This
thinking, considered by some to be daydreaming or fantasy, can also act as a motive
trigger. One way this occurs is when consumers deliberate about unsatisfied wants.
Situational Conditions: The particular situation confronting consumers may also trigger
arousal. This can occur when the situation draws attention to an existing physiological
condition, for example an advertisement for Coca-cola suddenly makes you aware of
being thirsty. Here, the need for liquids may have been present, but not yet strong enough
to trigger arousal. Seeing the advertisement draws attention to the condition and leads to
activity. Situational conditions can also work alone to generate motive arousal. This

appears to occur when circumstances draw consumers’ attention to the disparity between
their present state and something viewed as a better condition.
Stimulus Properties: Certain properties of external stimuli themselves also seem to have
the power to generate arousal. These collative properties include the characteristics of
novelty, surprising ness, ambiguity, and uncertainty. Stimuli possessing and sufficient
amount of these properties have the potential of drawing attention to themselves by
arousing an individual’s curiosity or desire for exploration. As such, they represent a
special type of situational condition. Stimuli with arousal potential are important for
marketers because they can be used to attract and focus consumers’ attention.
MODEL OF MOTIVES AND NEEDS

Learning
Unfulfilled Goal
needs Wants Tension Drive Behaviour or
& desires Need
Fulfill
ment
Cognitive
Processes
Tension
Reduction
CONSUMER PERCEPTION
Perception is defined as the “process by which an individual selects, organizes and
interprets stimuli into a meaningful and clear picture of the world.”
In simple, “How we see the world around us”. {Ex: There is a glass filled with fifty
percent water, while a person may say that the glass is “Half Filled”. another person may
finds the glass to be “Half Empty”. technically speaking, both the interpretations are
same, but the fifty percent filled or empty glass is seen or perceived differently by the
two people.

Consumer Research, in fact, proves that after the consumer develops a perception
of some “object” to follow the initial message, the consumer actually feels the needs to
hear or se the rest of it because a sense of having closure prevails,
This is called Zeigernik Effect.
It is not an uncommon situation which observes when we go to a bank. If three
customers go to a bank to withdraw money,
The first may chose to go to an ATM, Where no one is waiting in line.
Second person stands in a waiting line and
Third one may ask his wife to go to the withdrawal window.
Why these varying modes of behavior by each one when they have gone to buy the
same service offering (of withdrawing money from the bank)?
It is because; each individual brings a unique set of perceptions and attitudes to the
process that influences behavior.
Perception is made up of different concept. However within the frame work of
consumer behaviour, the basic elements or concept of perception include; Sensation,
Absolute Threshold, Differential Threshold, Subliminal Perception.
Sensation: Sensation is the immediate and direct response of the sensory organs to
stimuli. A stimuli is any unit of input to any of the senses. Examples of stimuli (i.e.
sensory input) include products, packages, brand names, advertisements, and
commercials. Sensory receptors are the human organs (the eyes, ears, nose, mouth, and
skin) that receive sensory inputs. Their sensory functions are to see, hear, smell, taste and
feel. All of these functions are come to play, either singly or in combination, in the
evaluation and use of most consumer products.
Absolute Threshold: The lowest level at which an individual can experience a sensation
is called the absolute threshold. The point at which a person can detect and differentiate
between “something” and “nothing” is that person’s absolute threshold for that stimulus.
Package designers try to determine consumers’ absolute thresholds to make sure that their
new-product designs will stand out from competitors’ packages on retailers’ shelves.
Differential Threshold: The minimal difference that can be detected between two
similar stimuli is called differential threshold, or the just noticeable different. When it

comes to product improvements, marketers very much want to meet or exceed the
consumer’s differential threshold; that is, they want consumers to readily perceive any
improvements made in the original product.
Subliminal Perception: Stimuli that are too weak or too brief to be consciously seen or
heard may nevertheless be strong enough to be perceived by one or more receptor cells.
This process is called subliminal perception. Because the stimulus is beneath the
threshold, or “limens”, of conscious awareness, though obviously not beneath the
absolute threshold of the receptors involved.
Perception Process
In studying consumer behaviour, perception process are divided into five parts
this includes; Pre-attentive Processing, Selection, Organization, Interpretation and
Elaboration.
Pre-attentive Processing: Pre-attentive processing refers to the simultaneous
preconscious monitoring of all sensory channels for events that will require a shift in
attention. This kind of pre-attentive processing is what makes it possible for us to
suddenly hear our name spoken across a crowed, noisy room or wake at the cry of a baby.
Selection: Perceptual selection refers to the fact that consumers select only a small
portion of the stimuli to which they are exposed for conscious processing, or what we
might term focal attention. To get the consumer’s focal attention, an escalation of sensory
impulses is required.
Organization: The third part in the perceptual process is perceptual organization.
Consumers classify perceptions into categories and apply prior knowledge about the
categories to organize them. Basically, categorization involves comparison between a
perceived target and categorical knowledge. Categorization is a fundamental sense-make
activity that encompasses all forms of stimulus situations.
Interpretation: The fourth part in the perceptual process is interpretation. The
interpretation of perceptual stimuli involves the application of learned associations
between perceptual cues, or signs, and meanings to novel stimuli. These associations are,
on turn, based on individual expectations, motivations, and experiences grounded in
cultural convention. Hence, interpretation depends on consumer knowledge structures. At
least two different sorts of knowledge structures are important to interpretation. One type,

called schemas. Schemas includes organized collections of beliefs and feelings that a
person has about objects, ideas, people, of situations. The second type of knowledge
structure, called scripts, includes sequences of actions associated with objects, ideas,
people, or situations.
Elaboration: Sometimes consumer interpretation of perceptual stimuli also includes
high levels of elaboration. Elaboration reflects the extent to which perceptual stimuli are
integrated with prior knowledge structures. Interpretation always involves some
elaboration, that is, some accessing of prior knowledge structures; but this can be at low
levels such as simply recognition. At high levels of elaboration, people engage in
processes such as counter arguing, problem solving, daydreaming, and fantasizing.
Elaboration produces freedom of memory and attitude from the specific details of the
original message or its setting. It can even result in a boomerang effect where the attitude
change is opposite to that advocated in the persuasive message.
ELEMENTS OF PERCEPTION:
People’s perceptions are limited by three ongoing processes of selectivity:
1. SELECTIVE EXPOSURE : It is the process by which people avoid stimuli in their
environment such as leaving the cinema hall when a song sequence is shown or
leaving the room while commercials are on a TV. The process is explained below:
• People are more likely to notice stimuli that relate to current need.
For Example
A person, who is not in the market for a personal loan, will not even look at the ad
showing low interest rates whereas one who is looking for a personal loan will
notice and even go through such an ad.
• People are more likely to notice stimuli that they expect or anticipate.
For Example
If a bank is promoting non – traditional bank service like, mutual funds or travel
related services and it has placed a mutual fund counter or travel agent’s desk in
the bank, many customers may not notice it, because they do not expect these
from a bank. Therefore, for calling attention of the people to those non –
traditional services “Promotional techniques” must be used.

• People are more likely to notice stimuli that are large in relation to normal
size of stimuli.
For Example:
Generally, companies selling cellular phone or credit card and even bankers run
quarter page or one – third of page ads in newspapers. If these are running for
nearly a month and suddenly there is a full page colorful ad for a week readers are
more likely to notice the “AD” because it is large in relation to useful ads.
2. SELECTIVE DISTORTION: It is the Phenomenon in which an individual
compares new information with his existing store of knowledge or frame of reference
and then in the case of an inconsistency, alerts the new information to confirm to he
established beliefs.
3. SELECTIVE RETENTION: It is the Phenomenon of retaining in memory only
part of what is perceived and particularly information that supports their existing
attitudes and beliefs. It has been found that consumers are much more likely to recall
seeing ads for their own bank than ads for other banks. Their own bank’s ads support
their choice of the bank. A large number of consumers cannot remember a typical
TV commercial one day after seeing it, if they are not using the product or if the ad is
nothing extraordinary.
The four factors that influence the way people perceive stimuli are:
 Social Factors
 Cultural Factors
 Psychological Factors
 Personal Factors.
EXTERNAL FACTORS INFLUENCING CONSUMER PERCEPTION:
1. NATURE: When the consumer sees any advertisement or product they may be
captured by the object which is visual or auditory, and whether it involves pictures,
people or animals. Pictures attract attention more readily than words, a picture with a
human beings attracts attention more than a picture of inanimate objects alone.
2. LOCATION: The consumer may be easily attracted by a picture. The best
location of a visual picture is directly in the front of the eyes or centre of a page. In

newspaper a position in the upper portion of a page is more favorable than; one in the
lower portions, left hand side receives more attention then the right hand side.
3. INTENSITY: Higher intensity always attracts rather than lower intensity. For ex;
A loud noise, Strong odour, bright light will be noticed more than a soft sound, weak
odour or dim light.
4. SIZE: Generally objects of larger size attract more attention then the smaller
ones. In advertising full page spread attracts more attention than a few lines in the
classified section.
5. CONTRAST: Usually plant safety signs which have black lettering on a yellow
background or white lettering on a red background are attention drawing.
6. MOVEMENT: The moving object receives more attention than an object
standing still.
7. REPETITION: Advertisement of a product flashed daily on TV is based on the
principle of repetitions.
8. NOVELTY AND FAMILIARITY: New objects in the familiar settings or
familiar objects in new setting will draw the attention of the perceiver.
ROLE OF STIMULI IN CONSUMER PERCEPTION:

In our daily life, we are constantly bombarded with the inputs from the external
environment. If our brain starts processing each and every stimulus, we will be in a
perceptual state of confusion.
Fortunately, receiving of stimuli by our sensory organs has an automatic check.
There is a threshold limit that puts a stop on the receiving process.
To perceive any idea about an object, there has to be a minimum receipt of
stimuli, this is called absolute threshold.
Stimuli intensity to reach the absolute threshold level will vary from sensory
organ to sensory organ and from person to person.
Sometimes marketers and advertisers purposely keep the level of stimuli below
the absolute threshold. This is to create a background atmosphere.
Subliminal perception can be either in the form of very briefly presented visual
stimuli, or accelerated sound track, usually at a low volume or hidden “meaningful”

word, hidden meaning words are generally sexual in nature and are also called disguised
stimuli.
PERSONALITY AND CONSUMER BEHAVIOUR
Personality can be defined as those inner psychological characteristics that both
determine and reflect how a person responds to his environment.
INNER CHARACTERISTICS: Attributes, Traits, and Mannerisms that distinguish
one individual from other individuals.
FACTORS INFLUENCING PERSONALITY:
1. Parent Inheritance
2. Brought up environment
3. Own individuality
NATURE OF PERSONALITY:
 Personality reflects Individual differences
 Personality is consistent and enduring
 Personality can change.
PERSONALITY THEORIES:
1. Sigmund Freud’s Psycho Analytic Theory of Personality
2. Neo – Freudian Personality Theory
3. Trait Theory
4. The Theory of Self Concept
1. SIGMUND FREUD’S PSYCHO ANALYTIC THEORY OF PERSONALITY:

This theory is based on
 Unconscious Needs or Drives
 Recollection of Early Childhood Experiences
 Analysis of Dreams
 Specific nature of their mental and physical problems
Interacting Systems of Personality:
1. ID - Relates with immediate satisfaction – Like Thirsty & Hunger

2. SUPEREGO – Individual’s internal expression of society’s moral and ethical code

of conduct - like marriage ceremony, wedding anniversary, earring function
3. EGO – Internal Monitor that attempts to balance the impulsive demands and socio
– cultural constraints.
Stages of Personality Development:
1. ORAL STAGE : ( 0 – 18 months ) – The interaction of an infant with the outside
world is through its mouth by the way of drinking and eating.
2. ANAL STAGE : (18 months – 3 years) – A Crisis develops in child’s life when
parents try to train the child. { Ex : Forcing the child to send the school }
3. PHALLIC STAGE : ( 3 – 7 years) – Child may feel attracted towards the parents
of the opposite sex. [ Ex. girl child have more affection on father vice versa].
4. LATENCY STAGE : (5 – 12 years) – There is no important change in this age.
But children like to enjoy friendship in this stage.
5. GENITAL STAGE: (12 – 20 years) – The opposite sex becomes center of
attention. They may away from self – oriented and parented love. {Ex. Day
dreaming and TV watcher}
2. NEO – FREUDIAN PERSONALITY THEORY:

This theory was propounded by 3 authors.
a) Alfred Adler: Individual’s effort to overcome the feeling of inferiority {By
striving for superiority.}
b) Harry Stack Sullivan: Concerned with individual’s effort to reduce tension
c) Karen Harney: Focused the impact of child – parent relationships.
Karen Harney’s Classification Of Three Personality Groups;
 Compliant Individuals : Those who move toward others. Their desire to be
loved, wanted & Appreciated.
 Aggressive Individuals: Those who move against others. Their desire to excel
and win admiration.
 Detached Individuals: Those who move away from others. In- dependence, self
– reliance, self – sufficiency, and freedom from obligation.
CAD – Test Developed and Tested among College Students.

Result: Highly Compliant Students – Prefer Name Brand Products

Highly Aggressive Students – Prefer Selective and Particular Brand
Highly Detached Students- Less Likely to be Brand Loyal and were more
likely to try different brands.
3. TRAIT THEORY :
This Theory is Primarily quantitative or empirical. A Trait is defined as “ any
Distinguishing, relatively enduring way in which one individual differs from other.”
Trait Theory is based on certain Assumptions:
1. Relatively stable in Characters.
2. Limited number of trait common to most of all.
3. People only differ in the degree of position.
Selected Single Trait Personality Test – {Which measure just one trait, like self-
confidence}.
1. CONSUMER INNOVATIVENESS: How a person responds to new
experiences.
2. CONSUMER MATERIALISM : The degree of the Consumer’s attachment to
“Worldly Possessions”.
3. CONSUMER ETHNOCENTRISM : The consumer’s likelihood to accept or
Reject Foreign Made Products.
4. THE THEORY OF SELF – CONCEPT

In this self concept theory, the concept of self refers to, the attitude people
hold about their own self. The overall classification follows.
• Actual Self Image – How the consumer feels about himself.
• Ideal Self Image - How the consumer would like to himself
• Social Self Image - How the consumer thinks others see him.
• Ideal Social Self Image – How the consumer wants others to see him.
Four Categories of Consumers:
1. Personal Level
2. Family Level

3. Community Level
4. Group Level.
• PERSONAL LEVEL: Consumer includes things of personal possession like
jewelleries, dresses, cosmetics etc. in defining one’s self. Understanding the
range of moods and personalities can help the marketer offer products which
implicitly carry the message “you are what you wear”.
• FAMILY LEVEL : This part of the extended self includes a consumer’s
residence and the things in it. The home is a symbolic body of the extended self
at the family level. “Dressing your home ….. Reflects the unique aura of your
own personality.
• COMMUNITY LEVEL : Whereby the consumer tends to personalize the
environment in which he has grown up, the neighborhood where he stays or
stayed, this is basically coming from sense of belonging. A marketer can use the
extended self image at the community level by evoking the nostalgic feeling of
the childhood memory. People are generally nostalgic about the place where they
have spent their childhood.
• GROUP LEVEL : When one feels attached to certain social group. The
consumer feels part of a crowd of cricket spectators, part of a sports team, etc.
[Ex: To evoking the self image at the group level is the famous Cadbury Milk
Chocolate bar where the husband is playing cricket and the wife is eating
chocolate out of tension]
PERSONALITY AND ITS RELEVANCE TO CONSUMER BEHAVIOUR

 While walking through the shopping centre, all of us have, sometime or the other,
felt attracted towards a particular product, may be due to the way it is displayed or
the way its is advertised or the look of the model.
 However, certain products attract only certain type of people, while others just go
past the same product without paying mush attention or even no attention.
 Hence, Nokia seems to project itself as a “Human technology, connecting
people.”
 Charms Cigarette projects itself as a “Person with image of its own”.

 The imported thing to be noted is that such a trend of personalizing, giving the
product a separate personal identity, is increasing.
 The reason being, marketers have realized that personality plays a vital role in the
purchase behavior, and if the right product is given the right personality touch,
marketer will meet with great success.
CONSUMER LEARNING
According to Oxford Dictionary “Learning is knowledge got by study of a
subject of systematic investigation.
In Marketing Management, “Consumer learning holds lot of significance for a
marketer and he is vitally interested in teaching the consumer about the product, Its
attributes, how to buy it, how to use it, and even how to dispose it.”
In a Marketer’s language, “learning is an ongoing process by which consumers
get the knowledge about purchase and consumption of a product and use the experience
of one time buying for future buying.”
In overall Consumer Learning is defined as the process by which individuals
acquire the purchase and consumption knowledge and experience they apply to future
related behaviour.
ELEMENTS OF LEARNING:
Despite their different viewpoints, learning theorists in general agree that in order for
learning to occur, certain basic elements must be present. The elements included in most
learning theories are
 Motivation
 Cues
 Response
 Reinforcement
1. MOTIVATION: Motivation plays a vital role in consumer learning, it acts as an
initial impetus to learning.
{For Example, a career minded student who wants to do a MBA course to
enhance the chances of a bright career will be “motivated” to search for a MBA

admission advertisement. The student will try to get information about the time of
admission test, fees structure of various MBA schools, placement scenario etc.}
On the other hand, a well established professional will be relatively disinterested
ion all such information. While, a retired person will be completely dis interested in
these kinds of information. Once the marketers know consumer motive, they try to teach
the consumer about the product.
2. CUES: Cues give direction to a motivated consumer. An aspiring MBA student will
get the cue from an advertisement, talking about a MBA programme, the type of course,
number of specialization the student can avail, and computer facility in the college and
quality of the faculty, all are cues, which guide the consumer.
3. RESPONSE: The aspiring MBA student, who gets a positive cue from the
advertisement, will respond to the advertisement. If he takes action in the favor of the ad
then it will be a positive response. If he further searches for other similar ads his
response to the original ad is a negative one, while if he simply overlooks the ad he is
giving a neutral response.
4. REINFORCEMENT: The memorable learning experience reinforces the buying
behavior, negative memories will take the consumer away from previous buying behavior
or pattern, while positive memories will reinforce the previous buying behavior as is
likely to happen to the computer student.
THEORIES OF CONSUMER LEARNING
BEHAVIOURAL THEORIES OF LEARNING COGNITIVE THEORIES OF LEARNING
1. Classical Conditioning Theory 1. Involvement Theory

2. Instrumental (Or) Operant Conditioning Theory 2. Central And Peripheral Routes To
Persuasion Theory
BEHAVIOURAL THEORIES OF LEARNING

1. Classical Conditioning Theory:
Early classical conditioning theory was based on a simple experiment performed
by the Russian Physiologist Ivan Pavlov.

An analogous model is one experiment with the human beings. Think when you
have your dinner everyday at 9”0” clock along with watching your favorite program
Crorepathi on TV.
Eventually, with the theme music of the program you will feel like eating even if
you are not actually hungry because you are unconsciously associating the two, theme
music and dinner.
UNCONDITIONED
STIMULUS : Dinner
Aromas
UNCONDITIONED
RESPONSE : SALIVATION
CONDITIONED
STIMULUS : 9 O’ clock
T.V. Programme
CONDITIONED CONDITIONED
STIMULUS : 9 O’ RESPONSE: SALIVATION
clock T.V.
Programme
THREE CONCEPTS ASSOCIATED WITH CLASSICAL CONDITIONING:

I) REPETITION: People have a tendency to forget, hence to be a part of consumer
memory, repetition of the action is necessary. EX : THUMSUP Advertisement with
the punch line of “ The taste of thunder”
a) ADVERTISING WEAROUT: Too little of repetition may be of no use, similarly
over repetition can be harmful. Hence the message can not be sent across. In advertising
jargon, it is called ADVERTISING WEAROUT.
b) COSMETIC VARIATION: Advertising wear out can be avoided only by changing
the format of advertising, but continue with the same theme, in other words it can be says
the message is same but the way of presentation is changed. This is called Cosmetic
variation.
c) SUBSTANTIVE VARIATION: The changes occur in the basic content of the
advertisement in the different versions with no change in the cosmetic features. In this the
consumers gain more stable long lasting experience from substantive variation.

II) STIMULUS GENERALISATION: Pavlov found that the dogs salivated not only to
the sound of the bell but also to similar sound of jangling keys. As like as this, if the
consumer learns certain attributes about a particular product of a particular brand,
through SG he will associate other products of the same brand with similar attributes.
 PRODUCT LINE EXTENSION: This is commonly practiced marketing
strategy of adding related products to an established brand. The products vary from
each other only superficially, may be in terms of the package, flavor, added facility
etc., EX : Britannia Bread. They are marketing different types bread. Premium
Quality White Bread, Spongy Sandwich Milk Bread, Energy plus – Whole Meal
Bread, Fruity – Sliced Fruit Bread.
 PRODUCT FORM EXTENSION: When the same product is offered in
different physical form, EX: Lifebuoy soap is obtained in bar form and liquid form.
Raga Herbal Shampoo was obtained in powder form and liquid form.
 PRODUCT CATEGORY EXTENSION: Originally the company starts with
few products. Once the brand name is established, the company diversifies into
making other products. EX: LG is a known name in Color TV. This is now followed
by Refrigerator, Washing Machines, Personal Computer, Cell Phone, and Air Cooler.
As like as this BPL, Britannia, ITC, HLL are also example for PCE.
 FAMILY BRANDING: This is the practice of marketing a whole line of
products under the same brand name. EX: Maggi Soup Range. Initially only tomato
soup was introduced followed by various other flavors such as Chicken Soup, Mixed
Vegetable Soup, Mushroom Soup, and Tomato Soup. Nestle- Milkmaid – Gulab
Jamun Mix, Kesar Kulfi, and Chocolate pudding.
 LICENSING: When a well known brand allows its name to be used by another
brand. Well known people allow their names to be associated with certain products
like EX: Scooty Pep with Preethi Zintha, Sharukkan with Hyundai. Sonya Mirza
with Getz, Dairy Milk with Amithap Batchan , Toyota Innova with Aamir Khan.
Sachin with MRF.
III) STIMULI DISCRIMINATION : It is the ability in the consumer to discriminate
one stimulus from the other and position them , according to his need. This is key to the

marketers success. That is why from time to time the marketers reward the loyal
customers by the way of providing discount coupons for traveling by the same airline
above a certain KM. Regular buyers in super market also get similar kinds of discounts.
2. INSTRUMENTAL ( Or ) OPERANT CONDITIONING THEORY
American Psychologist B.F.Skinner demonstrated this theory through the process
of trial and error. Once you come across a favorable outcome, it reaches the individual to
repeat the behaviour. Consumers, to satisfy their needs, may have tried various
alternative options and will remember products which satisfied or made them feel good,
and will respond to those products positively in future. It is called Positive
Reinforcement Or Rewarded Performance. Suppose, the product did not satisfy the
consumer means they shirk away from such products and also have Negative
Reinforcement Or Unrewarded Performance .
The Advertisement of Detegerents, Deodorants, and Footwear often use this
concept.
EX: Wheel Soap Ad. – It is based on housewife’s agony of washing clothes with various
other brands but not able to clean properly her husband’s clothes causing embarrassment
to the husband, till the wife discovers “Wheel”.
The message is that we should avoid the ordinary soaps which will bring in negative
outcome and only use the advertised product.
UNREWARDED –
Try Soap I Chemicals are too
Strong
Stimulus
Situation - Try Soap II UNREWARDED –
Need a Good Less in Quantity
Washing Soap
Try Soap III UNREWARDED –

Lacks the freshness
and fragrance
Try Soap IV
REWARDED –
PERFECT SOAP

The Reinforcement Rate and frequency can be of various types. At what rate an
advertisement should be shown to the consumer for a proper learning will vary on
product type, stage of product life cycle etc., Following is the reinforcement schedule.
1. FIXED – INTERVAL REINFORCEMENT : There is a fixed time gap
between the response and reward. Under such circumstances consumer tends to
respond slowly after the reinforcement.
2. VARIABLE - INTERVAL REINFORCEMENT: The marketer or advertiser
wants to keep an element of surprise and expectancy in the consumers so the
reinforcement is delivered at intervals varying in length.
3. FIXED – RATIO REINFORCEMENT: Reinforcement can be given at fixed
ratio.
4. VARIABLE – RATIO REINFORCEMENT: Consumer learns after certain
number of responses, but how many that neither the learner nor the teacher knows.
Here again predicting the appearance of consumer’s learned response is difficult.
COGNITIVE THEORIES OF LEARNING

Learning is seen as an intellectual activity, whereby consumers continuously
restructure the cognitions about a specific problem or product. These perpetual
restructuring results in insight which is a distinctive characteristic of intellectual activity.
Knowledge of products and brands is obtained deliberately or accidentally, the
knowledge is received, assimilated and retained in the memory, like other experiences.
The Basic Building Blocks of Cognitive Theory:
1. Information Processing: This is related to processing of the new information on
the basis of the attributes, brands, comparisons among the brands etc. The ability to
form the mental image varies from consumer to consumer, and is based on the
imagery, which depends on how the information is assimilated, stored and retrieved
later on. More previous knowledge the consumer has about the product greater will
be the learning capacity and clearer will be imagery.
2. Memory : Memory deals with how the consumer stores, retains and retrieves
information.

3. Structure of Memory: Information processing is a multistage process whereby,

initially memory is kept in sensory store, where the information is received through
our eyes, ears, nose, touch, tongue. But if this information is not processed, it is
deleted from the memory. EX: Air India uses its “ Maharaja” symbol as a symbol of
hospitality in a royal style, this is selection of an image to store the information.
Memory -----------Sensory Store------Short Term Store-
----- Forget(eyes, ears,
nose)
Long term Memory <---------- Rehearsal
4. Retention:
Memory Product Information New Information Knownbrand
Organised Reorganized Old Information

Information in the memory is constantly encourages the consumer to explore and
examine the new information. So the consumer always relates to a known brand or name
in the market more easily and quickly.
5. Retrieval : Accessing of information from long-term storage is called Retrieval.
Basically consumers tend to remember the benefits rather than the attributes. In general,
consumer’s retrieval process depends on : age of the consumer, as younger people are
able to retrieve more clearly.
Accessing of Long Time

Retrieval
Information Storage
1) INVOLVEMENT THEORY:
Our Human Brain can be divided into two parts, LEFT BRAIN and RIGHT BRAIN.
LEFT BRAIN - Responsible for – Reading, Writing, Speaking –Print Medium
High Involvement - While seeing any AD related with Financial Investment, High Rate
of return.
Low Involvement - RIGHT BRAIN – Responsible for – Emotional and intuitive
activities, Pictorial Version, Imagination ---Picture or TV Media, Seeing a
advertisement related with nail polish and cosmetics.

2) CENTRAL AND PERIPHERAL ROUTES TO PURSUASION THEORY:

Whenever the consumer is buying a low involvement product, consumer engages
in limited information search. And is less motivated to exert cognitive effort, this shows
the consumers peripheral route to persuasion .If the consumer follows the central routs to
persuasion, he will weigh each merit and demerit carefully before deciding on his buying
behaviour.as well as go for a comparative study with other competing products,
{EX: If you are buying a car, the marketer can take the peripheral route of
persuasion by highlighting the color and shape of the car and can take the Central Route
to Persuasion by talking about the engine and other machineries of the car.
General Characteristics of Learning

Regardless of which approach to learning is applicable in a given situation, several
general characteristics of learning are relevant and of interest to marketing managers.
Five of the most important are strength of learning, extinction (or forgetting), stimulus
generalization, stimulus discrimination, and the response environment.
Strength of Learning: The strength of learning is heavily influenced by four factors:
importance, reinforcement, repetition, and imagery. Generally, learning comes about
more rapidly and lasts longer; the more important the material to be learned; the more
reinforcement received during the process, the greater the number of stimulus repetitions
that occurs, and the more imagery contained in the material.
Importance: Importance refers to the value that the consumer places on the information
to be learned. The more important it is for you to learn a particular behavior or piece of
information, the more effective and efficient you become in the learning process.
Reinforcement: Anything that increases the likelihood that a given response will be
repeated in the future is considered enforcement. While learning frequently occurs in the
absence of reinforcement (or punishment), reinforcement has a significant impact on the
speed at which learning occurs and the duration of its effect. A negative reinforcement
involves the removal or the avoidance of an unpleasant consequence.
Punishment: Punishment is the opposite of reinforcement. It is any consequence that
decreases the likelihood that a given response will be repeated in the future. Basically,
there are two very important reasons for marketers to determine precisely what reinforces

specific consumer purchase: to obtain repeat purchases, the product must satisfy the goals
sought by the consumer; and to induce the consumer to make the first purchase, the
promotional messages must promise the appropriate type of reinforcement – that is,
satisfaction of the consumer’s goals.
Repetition: Repetition increases the strength and speed of learning. Quite simply, the
more times we are exposed to information or practice a behavior, the more likely we are
to learn it. The effects of repetition are, of course, directly related to the importance of the
information and the reinforcement given. Less repetition of an advertising message is
necessary for us to learn the message if the subject matter is very important or if there is a
great deal of relevant reinforcement. Since many advertisements do not contain
information of current importance to consumers or direct rewards for learning, repetition
plays a critical role in the promotion process for many products.
Imagery: Imagery Words, whether a brand name or a corporate slogan, create certain
images. The theory behind the imagery effect is that high imagery words leave a dual
code since they can be stored in memory on the basis of both verbal pictorial dimensions,
while low-imagery words can only be coded verbally. High-imagery brand names are
learned more quickly than are low-imagery names. Likewise, advertising claims
consistent with the image evoked by the brand name are easy to recall.
Extinction: Extinction, or forgetting as it is more commonly termed, occurs when the
reinforcement for the learned response is withdrawn, the learned response is no longer
used, or the individual is no longer reminded of response. The rate at which extinction
occurs is inversely related to the strength of the original learning. That is, the more
important the material, the more reinforcement, the more repetition, and the greater the
imagery and the more resistant the learning is to extinction.
Stimulus Generalization: Stimulus generalization (often referred to as the rub-off effect)
occurs when a response to one stimulus is elicited by a similar but distinct stimulus.
Thus, a consumer who learns that cookies taste good and therefore assumes that their new
Chocolate cones will also taste good has engaged in stimulus generalization. The fact that
stimulus generalization is common provides a major source of brand equity and brand
extensions based on brand equity.

Stimulus discrimination: Stimulus discrimination refers to the process of learning to

respond differently to similar but distinct stimuli. At some point, stimulus generalization
becomes dysfunctional because less and less similar stimuli are still being grouped
together. At this point, consumers must begin to be able to differentiate among the
stimuli.
Response Environment: Consumers generally learn more information than they can
readily retrieve. That is, we frequently have relevant information stored in memory we
cannot access when needed. One factor that influences our ability to retrieve stored
information is the strength of the original learning. A second factor affecting retrieval is
the similarity of the retrieval environment to the original learning environment. Thus, the
more the retrieval situation offers cues similar to the cues present during learning, the
more likely effective retrieval is to occur.
Matching the retrieval and learning environments requires an understanding of
when and where consumers make brand or store decision. Decision on brand or store
made at home do not have the same set of cues that are available at a retail outlet.
CONSUMER ATTITUDES
In general Attitude is “Learned predisposition to respond in a consistently
favourable and unfavourable manner with respect to a given stimuli.”
Attitude may also be defined as “an enduring organization of motivational,
emotional, perceptual, and cognitive process with respect to some aspect of the
individual’s world. This views attitude as being made up of three components: the
cognitive or knowledge component, the affective or emotional component and the
cognitive or behavioral tendency component.
Attitude Function
Attitudes serve four key functions for individuals:
Knowledge function: some attitudes serve primarily as a means of organizing beliefs
about objects or activities such as brands and shopping. These attitudes may be accurate
or inaccurate with respect to “objective” reality, but the attitude will often determine
subsequent behaviors rather than “reality”.

Value-expressive function: Other attitudes are formed and serve to express an

individual’s central values and self-concept. Thus, consumers who value nature and the
environment are likely to develop attitudes about products and activities that are
consistent with that value. These consumers are likely to express support for environment
protection initiatives, to recycle, and to purchase and use “green products.
Utilitarian function: This function is based on operant conditioning. We tend to form
favorable attitudes toward objects and activities that are rewarding and negative attitudes
toward those that are not. Marketers frequently promise rewards in advertising and
conduct extensive product testing to be sure the products are indeed rewarding.
Ego-defensive function: Attitudes are often formed and used to defend our egos and
images against threats and shortcomings. Products promoted as very macho may be
viewed favorably by men who are insecure in their masculinity. Or, individuals who feel
threatened in social situations may form favorable attitudes toward products and brands
that promise success or at least safety in such situations. Any given attitude can perform
multiple functions, though one may predominate. Marketers need to be aware of the
function that attitudes relevant to the purchase and use of their brands fulfill or could
fulfill for their target markets.
Characteristics of Attitude
Attitudes have several important characteristics or properties; namely, they have
an object; direction, intensity, and degree; have structure, and are learned.
Attitudes Have an Object: By definition, attitudes must have an object. That is, they
must have a focal point whether it is an abstract concept, such as “ethical behavior”. Or a
tangible item, such as a motorcycle. The object can be a physical thing, such as a product,
or it can be an action, such as buying a refuse bin. In addition, the object can be either
one item, such as a person, or a collection of items such as a social group; it also can be
either specific.
Attitudes Have Direction, Degree and Intensity: An attitude expresses how a person
feels toward an object. It expresses direction-the person is either favorable or unfavorable
toward, or for or against the object; degree- how much the person either likes or dislikes
the object; and intensity-the level of sureness or confidence of expression about the
object, or how strongly a person feels about his or her conviction. The direction, degree,

and intensity of a person’s attitude toward a product have been said to provide marketers
with an estimate of his or her readiness to act toward, or purchase, the product. However,
a marketer must also understand how important the consumer’s attitude is viz -a-vis other
attitudes, and the situational constraints, such as ability to pay, that might inhibit the
consumer from making a purchase decision.
Attitude Have Structure: Attitudes display organization, which means that they have
internal consistency and possess inter-attitudinal centrality. They also tend to be stale, to
have varying degrees of salience, and to be generalizable. The structure of human
attitudes may be viewed as a complex set erected in a type of circular pattern. At the
center of this structure are the individual’s important values and self-concept. Attitudes
close to the hub of this system are said to have a high degree of centrality. Other attitudes
located farther out in the structure possess less centrality. Attitudes do not stand in
isolation. They are associated with each other to form a complex whole. This implies that
a certain degree of consistency must exist between them. That is, because they are
related, there must be some amount of “fit” between them, or conflict will result. Also,
because the more central attitudes are related to a larger number of other attitudes, they
must exhibit a greater degree of consistency than more peripheral attitudes do. Because
attitudes cluster into a structure, they tend to show stability over time. The length of time
may not be infinite, but it is far from being temporary. Also, because attitudes are
learned, they tend to become stronger, or at least more resistant to change, the longer they
are held. Thus, newly formed attitudes are easier to change and less stable than are older
ones of equal strength. Attitudes tend to be generalizable. That is, a person’s attitude
toward a specific object tends to generalize toward a class of objects.
Attitude Are Learned: They develop from our personal experiences with reality, as well
as from information from friends, salespeople, and news media. They are also derived
from both direct and indirect experiences in life. Thus, it is important to recognize that
learning precedes attitude formation and change, and that principles of learning can aid
marketers in developing and changing consumer attitudes.
STIMULI: In Consumer Behavior, Stimuli could be a Product, Product Category, Brand,

People related to the product, etc.,

ATTITUDE FORMATION: Attitude is learned and not acquired unconsciously, people

pickup attitude depending on the basis of their need along with the environment they are
living in.
ATTITUDE NOT ONLY EVEN FOR MESSAGES

BRAND PRODUCTS
PUTTING CHILDREN IN CLUB MEMBER

CERTAIN TYPE OF SHIPS
SCHOOLS
FACTORS INFLUENCING ATTITUDE FORMATION:
1. INFORMATION: Acquired from mass media, friends and other people with
whom there is “communication”. Ex: An Advertisement coming in a leading daily will
be considered reliable.
2. EXPOSURE: “Net Effect” people are simultaneously exposed to information
coming from all type of sources.
3. GROUP MEMBERSHIPS: The people’s interaction can be voluntary or
involuntary. Groups can be primary groups like family, friends colleagues at the work
place, class mates etc. Ex: Bata Shoes “ The world at your feet” . Some times this type
of AD links you to evoking “ I am part of the Group”. The group may also be
membership group, to which a person belongs to which he aspires to belong. Ex: some
people have an attitude, aspiring to be the part of glamorous and rich life style –
OBEROI Hotel Advertisement.
4. ENVIRONMENTAL INFLUENCES: If people work for prolonged time in a
certain atmosphere, knowingly or unknowingly, they may be addicted the work culture.
CHANGE IN ATTITUDE:
Attitude Change can be defined as “ a finding that at a given time, a significantly
higher or lower proportion of the population holds certain attitudes than at an earlier
time”. In marketing, a consumer’s attitude towards a particular brand may be because of
his belief about certain attributes present in the brand and the relative importance of these
attributes.
So marketers try to bring about attitude changes by the following way.

Strategies Adopted by Marketers to bring Attitudinal Change :

1. Change Consumer’s Basic Motivational Function: The Classic example, can
be of Milk. This is traditionally taken to be strong food for children, patients and old
people. (NDDB) National Dairy Development Board, the apex body of Amul Dairy at
Anand, decided to promote milk as a drink for every Indian including young
generation. The main idea is to change people’s attitude of considering milk as an
avoidable product by health. Through Jingles and Advertisements an effort was
being made to make milk as a healthy fashionable drink. {Increasing Knowledge,
Value, Utility of product Etc.}EX: BURNOL can be used for burns and also as an
antiseptic cream.
2. Associating the Product with an admired group, special group and an event
or cause – People’s attitude to an extent are related to certain groups, social events
causes etc. Marketers some times take this path to change people’s attitudes.{ITC
Classic Cigarettes is associated with people who play golf etc.}
3. Relating Two Conflicting Attitudes: Advertisement shows, how by using less
fat, Cholesterol content oil “Saffola” helped the husband in recovering from severe
heart problem, and this made the housewife switch over to using “Saffola”. Today
the consumer prefers healthy and fat free oil, unlike the “Dalda” days when the
consumer preferred a cooking medium which delivered taste.
SELF - IMAGE (OR) SELF – CONCEPT

Self-image is defined as the totality of the individuals’ thoughts and feelings
having reference to him as an object.
It is our perception of ourselves and our feelings toward ourselves. In other
words, your self-concept is composed of the attitudes you hold toward yourself. The Self
Image can be divided into four basic parts.
That is Actual Versus Ideal, Private Versus Social.
DIMENSIONS OF SELF
ACTUAL SELF IMAGE IDEAL SELF IMAGE
CONCEPT (OR) IMAGE
HOW I ACTUALLY SEE HOW I WOULD LIKE TO
PRIVATE SELF
MY SELF SEE MYSELF.

HOW OTHERS HOW I WOULD LIKE

SOCIAL SELF
ACTUALLY SEE ME OTHERS TO SEE ME.
LIFE STYLE ANALYSIS

INTRODUCTION:
Life Style marketing is a process of establishing relationships between products
offered in the market and targeted life style groups.
DEFINITION:
The Marketing Dictionary Defines Lifestyle as “ Distinctive mode of behaviour
centered around activities, interests, opinions, attitudes and demographic characteristics,
distinguishing one segment of a population from another.”
Life style is an integrated system of a person’s attitudes, values, interests,
opinions and his over behavior.
CHARACTERISTICS OF LIFE STYLE:
• LIFE STYLE IS A GROUP PHENOMENON: A person’s life style bears the
influence of his participation in social groups and of his relationships with others. Ex.
Two clerks in the same office may exhibit different lifestyles.
• LIFE STYLE PERVADES VARIOUS ASPECTS OF LIFE: An Individual’s life
style may result in certain consistency of behavior. Knowing a person’s conduct in one
aspect of life may enable us to predict how he may behave in other areas.
• LIFESTYLE IMPLIES A CENTRAL LIFE INTEREST: For every individual there
are many central life interests like family, work, leisure, sexual exploits, religion,
politics, etc. that may fashion his interaction with the environment.
• LIFE STYLES VARY ACCORDING TO SOCIOLOGICALLY RELEVANT
VARIABLES: The rate of social change in a society has a great deal to do with
variations in lifestyles. So do age, sex, religion, ethnicity and social class. The increase
in the number of double income families and that of working women have resulted in
completely different lifestyles in the 1980’s in India.
FACTORS INFLUENCING THE LIFE STYLE ANALYSIS:
1. Culture and Society
2. Group and Individual Expectations and Values

3. Life Style Patterns and Values

4. Purchase Decisions
5. Market Reaction Consumer.
APPROACHES TO STUDY LIFE STYLE:
The study of life style is interdisciplinary. IT draws on a variety of disciplines
such as Anthropology, Psychology, Sociology and Economics. Basically
1. Products and Services Consumed.
2. Activities, Interests and Opinions.
3. Value Systems
4. Personality Traits and Self – Conception
5. Attitude towards various product classes.
APPLICATION OF AIO APPROACH:

AIO - ACTIVITIES, INTERESTS AND OPINIONS:
Studying the lifestyle closely through the AIO inventory of Heavy / Medium /
Light users of a product has been found to be immensely useful for markets.
US Studies have been done regarding The Heavy Use of Beer,
• 23 % of the People who drink Beer consume 80 percent of the beverage sold,
• The heavy Beer user became the advertising target of the new campaign.
Willian Wells and Douglas Tigert used an AIO inventory to probe the Heavy User
of Eye Cosmetics.
• The study revealed that such women were young, well educated and metropolitan.
• They are very high and heavy smoker.
• When compared with average women they make long distance telephone calls.
• They need always fantasies about trips around the world.
• They wanted a very stylish home.
In a study of Joseph T. Plummer’s AIO inventory to probe the Male Bank Credit
Card Users.
• Males who used bank charge cards heavily were described as urbane and active
with high income level and occupational and educational achievements.

• These persons places high value on personal appearance consistent with his career
and life style.
• They may buy at least three new suits a year
• They belong to several organizations and revealed contemporary attitudes and
opinions.
By using this AIO Inventory we have identified five female lifestyle groups and five
male lifestyle groups.
FIVE FEMALE LIFESTYLE TYPES:

1. Mrs. GUPTHA - {The content housewife}
2. JUHI - {The smart Urbanite}
3. KARISHNA - {The elegant socialite}
4. RADHA - { The middle aged mother}
5. SRIMATHIJI - { The old fashioned traditional women}
FIVE MALE LIFE STYLE TYPES:

1. TARUN DHANRAJ -{ The successful self entrepreneur }
2. RATAN TATA -{ The Epitome of a successful professional}
3. SURESH KUMAR GUPTHA -{ The devoted family man}
4. RAJESH ARYA -{ A frustrated middle aged man}
5. ISHWAR LAL -{ An affectionate grandfather}
CONSUMER EXPECTATION AND SATISFACTION

Before a company or a marketer can delight the consumer, it must have an in –
depth knowledge of the consumer’s expectations, so that not only are they able to meet,
but exceed the expectation, to delight the consumer. For this knowledge of the core
elements of the products and services are essential.
The core elements of a product are its
Shape, quality, color, quantity, packaging, price, brand name
differentiation, etc. While the core elements of service are Reliability, usefulness,

responsiveness to specific needs assurance and acceptability etc. from the service
provider.
 A Consumer expects fundamental benefits, not fancies.
 A Consumer expects performance and not empty promises.
 A Consumer expects Competency.
IN CASE OF AN AUTOMOBILE REPAIR:
 A Consumer expects things to be explained.
 A Consumer expects to know why you have suggested repairs.
 A Consumer wants to be shown respect.
 A Consumer wants competency ( Job done right, the first time)
IN CASE OF HOTELS :
 A Consumer expects a clean and secure room to be provided.
 A Consumer wants to be treated as a guest.
 A Consumer wants the premises to be kept.
IN CASE OF INSURANCE:
 A Consumer wants up to date information.
 A Consumer wants to be treated fairly in case of claims, etc.
 A consumer wants to be provided with prompt service.
FOR OTHER SERVICES AND PRODUCTS:
 A Consumer wants reliability which is the ability to perform the promised service,
dependability and accuracy.
 A Consumer wants tangibility or the appearance of physical facilities,
equi9pment, personnel and other materials.
 A Consumer wants responsiveness – the responsiveness to a query or to a call, ex.
Telephone enquiries. Sometimes nobody picks up the phone for a long time,
which irritates and turns off a consumer.
 A Consumer wants assurance – the knowledge and courtesy of employees and
their ability to convey trust and confidence.
 A Consumer wants empathy – the caring individual attention provided to
customers. Salesman putting himself in the customer’s shoes.

CONSUMER SATISFACTION
In Marketing, customer is very often referred to as a “King”. Customers are value
maximizers. Consumer Satisfaction is defined by Webster’s Dictionary as, “Fulfillment
of a need or want.”
Satisfaction is a person’s feelings of pleasure or disappointment, resulting from
comparison of a product’s perceived and actual performance in relation to his
expectations.
Satisfaction is often a subjective phenomenon and depends on the consumer’s
state of mind at the time of purchase and more importantly at the time of consumption. It
is important because in a large number of cases, some degree of post purchase dissonance
is evident among customers.
Many companies are aiming at high satisfaction because customers who are just
satisfied find it easy to switch when a better offer comes along. Those who are highly
satisfied are much less ready to switch. In fact, emphasis has shifted from mere
satisfaction to delight of customers. High satisfaction or delight creates an emotional
affinity with the brand and the supplier, not just a rational preference. The result is high
customer loyalty.
From the marketing viewpoint, products should have the ability to deliver value
satisfaction to consumers for whom these are intended. This satisfaction may be both
real and / or psychological. For example, when a house wife buys a Lakeme Lipstick,
she not only buys a chemical compound having some tangible features but also buys
beauty. The former may deliver a real value but the psychological value is delivered by
the latter.
Some Cautions in Measuring Customer Satisfaction:
When Customers rate their satisfaction with an element of the company’s
performance – say, delivery – the company needs to recognize that customers vary in
how they define good delivery. It could mean early delivery, on time delivery, order
completeness, and so on. It is not sufficient if a product enjoys a good market share. If
the company sits back. One fine day it might find that the market share enjoyed by it was
only a mirage created by artificial market conditions. It is essential for companies to
periodically assess customer satisfaction levels and take remedial action if needed.

Indicators of a satisfied customer

 Repeat orders in a competitive market
 A positive word of mouth reference about the product to likely users in the
industry.
 Response the product receives to any new launch
 Interest shown by visitors to the stall in industrial exhibitions.
 Brand awareness and recall. If the customer is loyal/ satisfied, the product will be
on the top of his mind.
CONSUMER LOYALTY
Brand is a comprehensive term and could be a name, sign symbol, logo etc. which
is used to differentiate the product or services of one seller / sellers from those of
competitors.
From the buyers’ point of view, a brand conveys a promise from the manufacturer
or seller in the form of specific attributes like, quality, value, services etc. to the
purchaser or user.
For example in the car category, firms have used brand names associating it with
a particular customer personality or image.
BRAND NAME CUSTOMER PERSONALITY

MARUTI 800 Economical, Fuel efficient car for higher
middle class customer
MARUTI ZEN Rich young upwardly mobile people.
CIELO Family car of the young rich
CONTESSA, MARUTI ZEN & CIELO Corporate cars
MERCEDES BENZ Car of super rich
TATA SUMO, SIERA, GYPSY & TATA Utility vehicle for rough ‘n’ tough
ESTATE conditions.
The exact meaning of the term consumer loyalty itself is not very clear.
Sometimes people may buy a particular product due to force of habit or the product may
be more economically priced as compared to its competitors and so on. So it would not
be right or correct to say that these people have consumer loyalty. But innovating firms
are interested in knowing the answers to certain questions:
1. Why did consumer buy a particular product?

2. How do consumers develop store and brand loyalty?

CONSUMER LOYALTY
Brand is a comprehensive term and could be a name, sign symbol, logo etc. which
is used to differentiate the product or services of one seller / sellers from those of
competitors.
Types of Loyalty Programmes
A market can be segmented based on consumer loyalty pattern. Each consumer
may be loyal to brands or stores or other entities.
1. THE HARDCORE LOYALS
2. SOFT CORE LOYALS
3. SHIFTING LOYALS
4. SWITCHERS
 THE HARDCORE LOYALS: They are the consumers who buy the same brand
all the time. So the buying pattern will be in the form A, A, A, A, A. The consumer is
a committed person with undivided loyalty to brand A. These type of consumers
always speak in favor of the brand, like a spokesperson they consider their brands as
icons.
 SOFT CORE LOYALS: These are consumers who are loyal to two or three
brands. The buying pattern adopted by them will take the form A, A, B, B, A, B.
This represents a consumer with divided loyalty between A and B. It is these
consumers who play a greater part in maintaining loyalty. EX: coke, pepsi, colgate,
closeup, amul butter etc.
 SHIFTING LOYALS: These are consumers who shift loyalty from favoring one
brand to another. The buying pattern of A, A, A, B, B, B shows a consumer who is
shifting brand loyalty from A to B. the attitude is seen in case of computer hardware
and software, banking services, durables that offer long term service contracts, retail
stores, airlines offering frequent flyer schemes etc.,
 SWITCHERS: These are consumers who show no loyalty to any brand. They
are very often referred to as deal a prone (buy the brand on sale) or variety prone and
fickle minded buyers their buying pattern A, C, E, B, D, B suggest a non loyal
customer.

So, in order to meet and beat competition, marketers are also interested in finding
out ways to have brand loyal customers. And they have to retain consumer loyalty.

UNIT – III
Concept of Group
A group consists of people who have a sense of relatedness as a result of
interaction with each other. Not every collection of individuals is a group, as the term is
used by sociologists. Actually, we can distinguish three different collections of people:
aggregations, categories, and groups. An aggregation is any number of people who are in
close proximity to one another at a given time. While, a category is any number of people
who have some particular attributes in common.
Classification of Group
Groups may be classified according to a number of dimensions, including
function, degree of personal involvement, and degree of organization.
Group by Content of Function
Group can viewed from the content of their function. Group can be categorized
along such lines as students, factory workers, church members, and so on. Actually, these
are subtypes of the major kinds of groups that we encounter in a complex society, which
could generally be categorized along such lines as family, ethnic, age, sex, political,
religious, residential, occupational, educational and so forth.
Group by Degree of Personal Involvement
By using this criterion, we can identify two different types of groups: primary and
secondary. The hallmark of a primary group is that interpersonal relationships take place
usually on face-to-face basis, with great frequency, and on an intimate level. These
groups have shared norms and interlocking roles. Families, work groups, and even
recreational groups (if individuals have some depth of personal involvement) are
examples of such groups.
Secondary groups are those in which the relationship among members is
relatively impersonal and formalized. This amounts to a residual category that includes
all groups that are not primary, such as political parties, unions, occasional sports groups.
Although such groups are secondary, the interpersonal relationships that occur may
nevertheless be face-to-face. The distinction lies in the lack of intimacy of personal

involvement.
Group by Degree of Organization

Groups range from those that are relatively unorganized to highly structured
forms. This continuum are usually simplify into two types: formal and informal. Formal
groups are those with a definite structure (for example, they may have a president, vice
president, secretary, and treasurer). They are likely to be secondary groups designed to
accomplish specific goals, whether economic, social, political, or altruistic. Informal
groups are typically primary groups, characterized by a relatively loose structure, a lack
of clearly defined goals or objectives, unstructured interaction, and unwritten rules.
Because of the extent of their influence on individuals’ values and activities, informal
groups are probably of greater importance in seeking to understand consumer behavior.
Group Properties
In order to understand the nature of groups better, we need to examine several
other important concepts, including status, norms, role, socialization, and power and their
significance for consumer behavior.
Status- Status refers to the achieved or ascribed position of an individual in a group or in
society, and it consists of the rights and duties associated with that position. Status also
may refer to some grouping on the basis of age or sex, family, occupation, and friendship
or common interest.
Norms - Norms are the rules and standards of conduct by which group members are
expected to abide. For informal groups, norms are generally unwritten but are,
nevertheless, usually quite well understood. For example, as a general manager for a
large financial institution, such as First Bank Nigeria Plc, you might be expected to live
in a certain area of town, drive a certain type of car, and dress well. Behavior deviation
outside these latitudes might result in slower advancement in the organization. Thus, as
employees or consumers, we often readily know what we can and cannot wear, drive,
say; eat, and so on, in order to be well accepted within the relevant groups.
Role - This term is used to designate all of the behavior patterns associated with a
particular status. Role is the dynamic aspect of status and includes the attitudes, values,
and behavior ascribed by the society to persons occupying this status. The social structure

partially prescribes what sort of role behavior is acceptable and thus what is expected.
For instance, an upper-class husband who is a successful physician may feel that in his
position he is expected to drive an expensive car, live in an exclusive neighborhood, dress
in fashionable clothes, and give generously to charities. Conversely, a lower-class
husband who is an assembly-line worker may feel comfortable in a role in which he
drives a pickup truck, lives in a bungalow, wear jeans and boots, and drinks beer with his
friends. Role has a strong, pervasive influence on our activities as consumers. For
example, other people have expectations regarding the products we buy to meet the needs
of our roles. Just a few of the many consumption decision directly affected include the
places we shop, the clothes we wear, the cars we drive, the house in which we live, and
the recreational activities we engage in. marketers, therefore, help individuals play their
roles by providing the right costumes and props to be used in gaining acceptance by some
group. Again, it’s the symbols of products that provide so much of the satisfaction that
accrues from a product.
Socialization - Socialization refers to the process by which a new member learns the
system of values, norms, and expected behavior patterns of the groups being entered.
When a new student arrives on a university campus, she or he soon learns from fellow
students what is expected in the way of dress, eating patterns, class attendance, extra-
curricular activities, and so on. Residents new to a neighborhood soon learn what patterns
are expected in the group concerning home maintenance; learn lawns and landscaping,
interior decoration, entertaining and so on. Thus, individuals are continually engaging in
the process of socialization (although it is more intense at an early age) as they encounter
new groups that have an impact on their lives. Consumer socialization, therefore, is the
process by which individuals acquire skills, knowledge, and attitudes relevant to their
effective functioning as consumers in the marketplace. This is particularly relevant to
young people, although, as an ongoing process, it has usefulness in other situations, too,
as was indicated above.
Power - Groups have power to influence their members’ behavior. Various sources of
social power may be operative in different social group situations: reward power,
coercive power, legitimate power, expert power, and referent power. Marketers seek to
use these forms of power to influence consumers.

SOCIAL CLASS
Social class is defined as ranking of people within a culture. Social classes are
based on such attributes as income, occupation, education and type of dwelling.
The social class based on three variables.
1. Family Income
2. Occupational Status
3. Education Attainment.
Types of Social class system:
1. Upper Class: Members of this highest class, the social elite, come from old and
usually well known families and live on inherited wealth, although some work at formal
jobs.
2. Lower Upper Class: These professionals and business people often start life in the
middle class but rise by virtue of their outstanding abilities and high earnings.
3. Upper Middle Class: This class is made up of professionals, small business owners
and corporate managers with comfortable incomes.
4. Middle Class: The middle class is composed of both white and blue collar workers
who earn an average salary.
5. Working Class: Made up largely of blue collar workers. This largest of the social
classes also includes people who earn average salary but apt for a blue – collar life style.
6. Upper Lower Class: These working poor perform unsupplied labor and memorial
work for minimal wages.
7. Lower Lower Class: The members of the lowest class dwell in poverty: they are
unemployed and often on welfare.
Class Structure in India:
The class structure in India is different from those of the other nations.
 Brahmins
 Kshatriyas
 Vasihyas
 shudras
These four castes have further sub groups nearing 3000. The relative sizes and
structures of social class vary by culture.

Social Class Mobility:

1. Upward Mobility: individuals can achieve a higher status. Usually this is achieved
either through educational or occupational achievements.
As an example, a person who is a simple graduate and is working at a salary of
Rs. 4000 p.m. does MBA and gets a salary of Rs.10000 p.m. achieves a higher social
status due to his higher income.
An auto mechanic, who starts his own shop to repair automobiles, raises his status
by excelling in his occupation.
2. Downward Mobility: Due to socio economic pressure, the upper middle class and
middle class individuals are not able to maintain their life style as per their social class
level. The downward mobility causes frustration, insecurity and disappointment.
The individual undergoes tremendous stress to maintain his honour in the society. It
sometimes leads to dispossession of one’s prestigious possessions like home or car.
3. Social Class Fragmentation: The media explosion, particularly TV has exposed
consumers to beliefs and values of other classes of society. Internet has made the
communication boundryless. Internationalization is occurring at the speed of sound.
Applications of Social Class to Consumption:
Social class provides consumer researchers an insight of values, attitude and
behavior that distinguishes the members of various classes. The marketers make their
strategies based on these factors.
1. Clothing, fashion and shopping: What is fashion or taste? Each social class differs in
the perception of fashion or taste. Lower class generally has a preference for a typical
type of clothing and color as it offers them identification.
For example, most of the lower class people will use bright colors or similar
clothes as used by film stars as they want to be identified in the society.
The upper class select clothes having established brands like Arrow, Benetton or
Park Avenue and they will try to look suitable.
2. The Pursuit of Recreation and Leisure: Members of upper social class tend to relate
themselves with recreational and leisure activities related to their status. Golf, bridge,
theatre and concerts are the recreational activities related to upper class, whereas going to
pools or billiards is now associated with young upper middle class.

3. Savings, Spending and credits: Upper Class consumers are more conscious about
their future. They prefer to invest in real estate and stocks. They are the big insuring
customers. They believe in long – term in contrast to short – term gratifications.
The lower class believes in immediate gratification and their savings are linked to
safety and security.
How credit card is used, is typical phenomenon. An individual of upper class uses
a credit card to meet his credit bills.
Whereas middle class credit card holder uses it for installment purchases.
CULTURE
Concept and Nature of Culture
Culture refers to a set of values, ideas, artifacts, and other meaningful symbols
that help individuals communicate, interpret, and evaluate as members of society. Culture
does not include instincts, nor does it include idiosyncratic behavior occurring as one-
time solution to a unique problem.
Culture provides people with a sense of identity and an understanding of
acceptable behavior within society. Some of the more important attitudes and behaviors
influenced by culture are the following; Sense of self and space; Communication and
language; Dress and appearance; Food and feeding habits; Time and time
consciousness; Relationships (family, organizations, government, etc.); Values and
norms; Beliefs and attitudes; Mental process and learning; Work
habits and practices.
The purpose of our discussion on consumer behaviour and not withstanding the
diversity of the concept, culture can be defined as the sum total of learned beliefs, values,
and customs that serve to direct the consumer behavior of members of a particular
society.
In other words, Culture is the complex whole that includes knowledge, belief, art,
law, morals, customs, and any other capabilities and habits acquired by humans as
members of society.
Several aspects of culture require elaboration. First, culture is a comprehensive
concept. It includes almost everything that influences an individual’s thought process and

behaviors. While culture does not determine the nature of frequency of biological drives
such as hunger or sex, it does influence if, when, and how these drives will be gratified. It
not only influences our preferences but how we make decision and even how we perceive
the world around us. Second, culture is acquired. It does not include inherited responses
and predispositions. However, since much of human behavior is learned rather than
innate, culture does affect a wide array of behaviors.
Third, the complexity of modern societies is such that culture seldom provides
detailed prescriptions for appropriate behavior. Instead, in most industrial societies,
culture supplies boundaries within which most individuals think and act. Finally, the
nature of cultural influences is such that we are seldom aware of them. One behaves,
thinks, and feels in a manner consistent with other members of the same culture because
it seems “natural” or “right” to do so. The influence of culture is similar to the air we
breathe; it is everywhere and is generally taken for granted unless there is a fairly rapid
change in its nature.
Basic Characteristics of Culture
Although the definitions of culture presented earlier are excellent, they seek to
characterize culture in only a few words. It is evident that the concept is difficult to
convey clearly in any definition. However, despite the challenges involve in defining the
concept, many social scientists agree that the following features are essential.
Culture is invented - Culture does not simply “exist” somewhere waiting to be
discovered. People invent their culture. This invention consists of three interdependent
elements: (1) an ideological component, that consists of the ideas, beliefs, values and
ways of reasoning that human beings learn to accept in defining what is desirable and
undesirable; (2) a technological component that consists of the skills, crafts, and arts that
enable humans to produce material goods derived from the natural environment; and (3)
an organizational component (such as the family and social class) that makes it possible
for humans to coordinate their behavior effectively with the actions of others.
Culture is learned - Culture is not instinctive, but is learned beginning early in life and
is charged with a good deal of emotion. The great strength of this cultural stamp handed
down from one generation to another is such that at an early age, children are firmly
imbued with their culture’s ways of acting, thinking, and feeling. This obviously has

important implications for the behavior of consumers because these preconditions of that
behavior are molded by their culture from birth.
Culture is Social Shared - Culture is a group phenomenon, shared by human beings
living in organized societies and kept relatively uniform by social pressure. The group
that is involved in this sharing may range from a whole society to a smaller unit such as a
family.
Cultures are Similar but Different - All cultures exhibit certain similarities. For
example, each of the following elements is found in all societies: a calendar, cooking,
courtship, dancing, education, family, gestures, government, housing, language, law,
music, and religious ritual. There is, however, great variation from society to society in
nature of each of these elements, which may result in important consumer-behavior
differences around the world.
Culture is Gratifying and Persistent - Culture satisfies basic biological needs as well as
learned needs. It consists of habits that will be maintained and reinforced as long as those
who practice them are gratified. Because of this gratification, cultural elements are
handed down from generation to generation. Thus, people are comfortable doing things in
the customary way, such as traditional marriage found in Nigeria.
Our thorough inculcation with culture causes it to persist even when we are
exposed to other cultures. No matter where we go or what we do, we cannot escape our
cultural heritage.
Culture is Adaptive - In spite of our resistance to change, cultures are gradually and
continuously changing. Some societies are quite static, with a very slow rate of change,
while others are more dynamic, with very rapid changes taking place.
Culture is Organized and Integrated - A culture “hangs together” that is, its parts fit
together. Although every culture has some inconsistent elements, it tends to form a
consistent and integrated whole.
Culture is Prescriptive - Culture involves ideal standards or patterns of behavior so that
members of society have a common understanding of the right and proper way to think,
feel, and act. Norms are society’s rules or guidelines specifying what behavior are
appropriate or inappropriate in given situations.
Concept and Types of Cultural Values

From sociological perspective, cultural value can be defined as “a widely held

belief or sentiment that some activities, relationships, feelings, or goals are important to
the community’s identity or wellbeing.” In a psychological vein, Milton Rokeach defines
values as centrally held and enduring beliefs that guide actions and judgments across
specific situations and beyond immediate goals to more ultimate end states of existence.
Values, therefore, produce inclinations to respond to specific stimuli in standard ways.
That is, a specific behavior is expected to either help or hinder the attainment of some
value or group of values. Consumers, then, are motivated to engage in behaviors designed
to enhance the achievement of certain values and to avoid those behaviors perceived to
hinder the attainment of certain value states.
Values are cultural determined; this means that they are learned from social
interaction, largely from our families and friends in settings such as schools and places of
worship such as mosques and churches. Values strongly influence consumer behavior;
even though specific situations may dictate slightly different actions, overall there is
much similarity in consumer behavior within a given culture, such as in tastes, methods
of shopping and so forth.
It is crucial for the marketer to understand society’s basic value structure so that
strategy decisions do not fly in the face of ingrained cultural patterns. It is much easier to
harmonize with the culture than to attempt to change fundamental cultural values.
Types of Cultural Values
Values transcend specific objects and situations. They deal with modes of conduct
(termed instrumental values) and end-state of existence (called terminal values). That is,
an individual who has a “value” has an enduring belief that a particular mode of conduct
or end-state existence is preferable to some other mode of conduct or end-state of
existence. Values serve as standard or criteria that tell us how to act, what to want, and
what attitudes to hold, and they allow us to judge and compare ourselves with others.
Culture Sub – Culture and Cross Cultural Aspects of CB

Culture
Study and Subculture
Material – Consumer Behavior
Culture refers to the set of values, ideas and attitudes that are accepted by a
homogeneous group of people and transmitted to the next generation.
o Subcultures - groups within the larger, or national, culture with unique
values, ideas, and attitudes.
o three largest racial/ethnic subcultures in the U.S
 Hispanics,
 African-Americans
 Asians .
o Each of these groups exhibits sophisticated social and cultural behaviors

that affect their buying patterns.
1. African-American Buying Patterns
 African-Americans have the largest spending power of the three subcultures
 While price conscious, they are motivated by product quality and choice.
 Respond to products and advertising that appeal to their African-American pride
and heritage as well as address their ethnic features and needs.
2. Hispanic Buying Patterns
 Hispanics represent the largest subculture
 About 50% are immigrants
 The majority are under the age of 25.
 Marketing to Hispanics has proven to be a challenge because
o The diversity of this subculture
o The language barrier.
 Sensitivity to the unique needs of Hispanics by firms has paid huge dividends.
3. Asian Buying Patterns
 The Asian is the fastest growing subculture.
 About 70% of Asians are immigrants
 Most are under the age of 30.
 Asians represent a diverse subculture, including Chinese, Japanese, Filipinos,
Koreans, Asian-Indians, people from Southeast Asia, and Pacific Islanders.
• Two groups of Asian-Americans have been identified:
• Assimilated Asians are conversant in English
• Highly educated
• Exhibit buying patterns very much like "typical" American consumers.
• Non assimilated Asians are recent immigrants who cling to their native languages
and outcomes .
FAMILY GROUP
The term Family is a basic concept; it is not easy to define because family
composition as well as the roles played by family member is almost always in transition.
Family is defined as “Two or more persons related by blood, adoption or marriage
who reside together”.
Family Types:
1. Nuclear Family: It consists of two adults of opposite sex living in a socially approved
sex relationship with their children. It consists of husband, wife and their offspring.
2. Joint Family: It includes a nuclear family and other relatives such as parents of
husband/wife, aunts, uncles and grand parents, also.
Key Family Consumption Roles:

1. Influencers: Family members who provide information to other members about a
product or service.
2. Gate keepers: Family members who control the flow of information to other members
about a product or service into the family.
3. Deciders: Family members with a power to determine unilaterally or jointly whether to
shop for, purchase use, consume or dispose off a specific product or service.
4. Buyers: Family members who make the actual purchase of a particular product or
service.
5. Preparers: Family members who transform the product into a form suitable for
consumption by other family members.
6. Users: Family members who use or consume a particular product or service.
7. Maintainers: Family members who service or repair the product so that it will provide
continual satisfaction.
8. Disposers: Family members who initiate or carry out the disposal or discontinuation of
a particular product or service.
Family Life Cycle:

The family life cycle is a composite variable created by systematically combining

such commonly used demographic variables as marital status, size of the family, age of
family members, and employment status of the head of the household.
Traditional Family Life Cycle:

This FLC basically consists of five stages.
STAGE 1: BACHELORHOOD.
Young single adults living apart from the parents. Young single adults are apt to
spend their incomes on rent, basic home furniture, the purchase and maintenance of
automobiles, travel and entertainment, and clothing and accessories.
They tend to be more fashion and recreation oriented, spending a substantial proportion
of their income on clothing, alcoholic beverages, food away from home, vacations,
leisure time pursuits and other products and services involved in the matting game.
STAGE 2: HONEYMOONERS.
The young newly married couple. After getting married, the life style changes
slightly. They lead a joint life style. They share new experiences and responsibilities.
Start spending on furnishing and house hold goods. They also tend to have a dual income
and spend heavily on outings, vacations, luxury, restaurants, meals, etc.
STAGE 3: PARENT HOOD – FULL NEST – I .
Young married with child. With the addition in family, purchases are
concentrated on baby foods, clothing’s, medical care, health products. A change is
brought about in the lifestyle and most activities revolve round the care of the child.
STAGE 4: FULL NEST – II.
Older married with children. More children lead to more expenses. Children start
going to school and there is more expenditure on books, stationary and college fees.
Toys, bicycle, insurances also become a part of the expenses, and parents start spending
less on them.
STAGE 5: FULL NEST – III.
Older married with dependent children. Income is high at this stage. Parents grow
older. They become experienced buyers and are less interested in new product purchases.
Expenditure high due to replacement buying luxury products.

STAGE 6: EMPTY NEST

Older married with no children living with them. Financial position stabilizes and
there is no expense on children. The couple is free to enjoy their own pursuits and spend
on luxury or self improvement items and medical care.
STAGE 7: SOLITARY SURVIVOR
Older single retired people. Retired people living alone, after the death of a
partner. Life becomes lonely and income may reduce due to retirement. This again
changes the consumption pattern and living style of old people.
Modern Family Life Cycle

During recent years, many changes in the family have occurred, particularly in
smaller family size, postponement of marriage, and rising divorce rates. Thus, another
conception of the family life cycle, which includes such stages as divorced, single parents
and middle-aged married without children, has been offered. This modernized version is
described as consisting of the following groups.
i. Bachelor I: head is 18-34, single (never married, divorced, separated, widowed), no
dependent children.
ii. Young Couple: female head is 18-34, couple (marriage or unmarried), and no children.
iii. Full Nest I: female head is 18-34, couple (married or unmarried), youngest child
under 6.
iv. Full Nest II: female head is 18-34, couple (married or unmarried), youngest child 6 or
over.
v. Single Parent I: head is 18-34, single (never married, divorced, separated, widowed),
youngest child 6 or over.
vi. Single Parent II: head is 18-34, single (never married, divorce, separated, widowed),
youngest child 6 or over.
vii. Bachelor II: head is 35-64, single (never married, divorced, separated, widowed) no
dependent children.
viii. Childless Couple: female head is 35-64, couple (married or unmarried), and no
dependent children.

ix. Delayed Full Nest: female head is 35-64, couple (married or unmarried), youngest
child under 6.
x. Full Nest III: female head is 35-64, couple (married or unmarried), youngest child 6 or
over.
xi. Single Parent III: head is 35-64, youngest child 6 or over.
xii. Bachelor III: head is 65 or older, single (never married, divorced, separated,
widowed), not dependent children.
xiii. Older Couple (Empty Nest): female head is 65 or older, couple (married or
unmarried), no dependent children.
The modernized family life cycle is based on age (of the female in the household,
if appropriate), which is traced through the groups of young, middle aged, and elderly.
These various ages are affected by two types of critical events: (1) marriage and
separation (by divorce or death), and (2) arrival of the first child and departure of the last
child. Thus, the modernized family life cycle accounts for four household types over
three age groups through a person’s lifetime.
CONSUMER REFERENCE GROUPS:

Reference groups are groups that serve as a frame for purchase decisions. A
Reference group may be defined as “Any person or group that serves as a point of
comparison for an individual in the formation of either general or specific values,
attitudes or behaviors.”
Types of Reference Groups:
a) Normative Reference Groups: Reference groups that generate values or

behavior of a person are called Normal Reference Groups. Such groups are those with
whom the person came to contact directly, almost daily and learn the early behavior
and attitude there. Ex: College – molding the student’s general consumer values and
behavior, appropriate ways to dress for specific occasions, how and where to p, what
constitutes ‘good’ values.
b) Comparative Reference Groups: Reference group that serve as benchmarks for
specific narrowly defined attitudes or behavior are called comparative reference
groups. Such group may be a friend’s family whose lifestyles may be admirable and

worthy of imitation {The way they maintain their home, their choice of home
furnishings, etc.}
c) Contractual Reference Group: This group is one in which a person holds a
membership or has regular face to face contact and whose values, attitudes and
standards he approves. Thus, a contractual group is likely to have a congruent
influence on an individual’s attitudes on behavior
d) Aspirational Reference Group: It is one in which person doesn’t have a
membership but aspires to be a member. Thus, this has a positive influence on the
behavior.
e) Disclaimant Reference Group: It is the group in which a person holds
membership but whose values, attitudes and standards he disapproves. Hence, it has a
negative impact on the behavior of the person.
f) Avoidance Reference Group: This group is one in which neither a person holds
membership nor he aspires to be the part of the group. Thus, person tends to adopt
attitudes and behaviors that are opposite to the norms of such group.
Factors Affecting Reference Group Influence:

Each reference group influences the individual behaviour. The degree of influence
that a reference group exerts on the individual’s behaviour usually depends upon the
nature of individual and the product and other social factors. The following factors
influence on the reference group;
1) Information and Experience: If the individual himself has first hand knowledge and
experience with a product or service, or can easily obtain full information about the
product or service, is less likely to be influenced by the advice of any other person or
group.
On the other hand, if he has little or no knowledge or experience about the
product or service, and does not have an excess objective information about the
product or service, is more likely to seek out the advice or example of others whom
he thinks have sufficient and reliable information about the product or service. Thus if
a person has insufficient experience or information concerning a product, he will be
more susceptible to the influence, either positive or negative.

2) Credibility, Attractiveness and Power of the reference Group: When

consumers are concerned with obtaining accurate information about the performance
or quality of the product or service, they are likely to be persuaded by the sources
considered credible. When consumers are primarily concerned with the acceptance or
approval of others they like, with whom they identify or who offer them status or
other benefits, they are likely to adopt their product, brand or other behavioural
characteristics.
Reference Group Influence on Product & Brand
NECESSITY LUXURY
Weak reference group influence on product {-} Strong reference group influence
on product { + }
PUBLIC Public Necessities Public Luxuries

Strong reference group Influence: Weak product and string. Brand Influence: Strong product and brand
influence on brand {+ } Examples: Wristwatch, automobile, man’s suit Examples: Golf clubs sail boat.
Private Necessities Private Luxuries
PRIVATE Influence: Weak product and brand Influence: Strong product and weak
Weak reference group Examples: mattress, floor lamp, refrigerator. brand
influence on brand { - } Examples: home video game, icemaker.
Reference Group Application in Consumer Behaviour:

The reference group concept is used by advertisers to persuade consumers to
purchase products and brands by portraying products being consumed in socially pleasant
situations, or else, using prominent and attractive people to endorse products or services
and, often, by using stereotyped group members as spokespersons in advertising.
Mainly three major reference group appeals are used for promotional purposes.
These are – Celebrity appeals, Experts’ appeals and Common man appeals.
CELEBRITY APPEAL
Celebrity – Celebrities are persons who are admired by the public on one count and the
other. Such persons are athletes, cine-stars, sports-heroes and TV personalities.
Advertisers use these celebrities for promoting their products with the expectation that
their appeal would influence the readers or viewers.
Celebrity Appeal can be further divided in to 4 types.

1) Testimonial: A testimonial appeal is one where a celebrity is known to be using a

particular product and appeals to the audience to use the same product. EX:
Aishwarya Roy making an appeal to donate your eyes to eye bank.
2) Endorsement: Endorsement appeal is one where celebrity has allowed his name
to be used along with the product. EX: Sachin Tendulkar has endorsed himself with
MRF Tyres.
3) Actor : In this type of appeal, the celebrity is not acting as himself but posing just
as an actor EX: Jyotika coming in ads of RMKV silks, Akshaya Kumar coming in
ads of Ruf & Tuf.
4) Spokesperson: In this type of appeal, a celebrity is associated with a particular
brand for a long time, so that name of the celebrity itself becomes a symbol of that
brand. EX: Kapil Dev acting as a spokesperson for Samsung. Ajay Devgan and Kajol
acting as a spokesperson for whirlpool refrigerator and washing machine.
EXPERT APPEAL :
Expert is a person who is in a unique position by his occupation, special training
or experience and therefore, he influences the prospective consumers by his advice for
purchasing the product. EX: L & T Product Ultra Tech Cement has the tie line of
“Engineers’ Choice”.
COMMON MAN APPEAL:
Marketers also employ common man for promoting their product. It is because of
consumers that he is also among us. Such appeals are more effective. A group of
common man is also used for such appeals. EX: Arokiya Milk with the tag line of
“Arjunoda Amma Yaru”.
UNIT – 5
DIFFUSION OF INNOVATION
Diffusion is a process by which a new product is accepted and spreads
through a market. It is a group phenomenon, in which first an idea is perceived, then it
spreads through out the market, and then individuals and groups adopt the product.

DEFINITION:
“Diffusion is a process by which the acceptance of an innovation and new
product, a new idea, a new service, is spread by communication to members of a social
system over a period of time.”
Types of Diffusion Process
1. Typical Diffusion Process: It shows a slow growth or adoption. It later rises
rapidly, and then a period of slow growth is noticed.
2. Fast Diffusion Process: The product clicks immediately. The spread of
innovation is very quick. People patronize the product immediately and later on
there is again slow diffusion.
3. Slow Diffusion Process: The product takes a lot of time to diffuse or spread, and
the consumer follows a pattern of adoption slowly by getting acquainted with the
product.
The rate of spread of innovation depends on a number of factors:
1. Type of Group: Some groups, who are young, affluent and highly educated,
accept changes faster than the old, traditional and poor groups. This shows that
the target market is an important determinant of the rate of diffusion.
2. Perceived Risk: The more the risk associated with changing to new innovation,
the slower is the rate of diffusion. The risk consists of the product not performing
as expected, the risk of the consequences of change – over, and the risk of
reverting back to the old product, if not satisfied with the innovative product.
3. Type of Decision: An individual decision is faster then collective ones.
4. Marketing Effort: This also affects the diffusion process. More aggressive
marketing effort, consisting of high and continuous advertising expenditure,
diffuses faster then otherwise.
5. Trial: The trial can be taken at low cost and low risk, the diffusion is faster.
Some products can be borrowed, rented or, their trial can be taken at retail outlets.
These products like medicines and other low priced items have faster diffusion.
6. Fulfillment of felt need: The faster a need is satisfied or fulfilled by a product,
the greater is the rate of its diffusion.

7. Compatibility: The more the product is compatible with the beliefs, attitudes and
values of the individual or group the faster the diffusion – vegetables soup for
vegetarians, ordinary microwave no roasting.
8. Relevant Advantage: The advantage could be of price, quality, ease of handling,
product quality. To have quick diffusion, the product must offer either a price
advantage or a performance advantage. Washing machine is expensive but a
labour saving device.
9. Complexity: If the product is complex {difficult to understand and use} the
diffusion is slower. The product may be complex but its use must be easy.
10. Observability: The more easily the positive effects of the products can be
observed, the more discussion takes place and faster the diffusion process. Eg.
Cell phones.
CLASSIFICATION OF ADOPTERS:
Adopters can be classified into five groups based on the time when they adopt.
INNOVATORS: The first 2.5% adopt innovation
EARLY ADOPTERS: The next 13.5% to adopt.
EARLY MAJORITY: The next 34% to adopt.
LATE MAJORITY: The next 34% to adopt
LAGGARDS: The final 16% to adopt.
INNOVATORS:
They are venturesome risk takers. They are younger, more educated and socially
mobile. They have the capacity to absorb risk associated with the new product. They are
cosmopolitan in outlook, are aware and make use of commercial media. And are eager to
learn about new products, are progressive, ready to use new products.
EARLY ADOPTERS:
They take a calculated risk before investing and using new innovations. They are
opinion leaders and provide information to groups, but they are also concerned about
failure. Therefore, they weigh advantages and disadvantages of the product before
plunging in for a purchase.

EARLY MAJORITY:
They tend to be more continuous and use the product after the innovators and
early adopters seem to be satisfied with it. They are elders, well educated and less
socially mobile. They rely heavily on inter personal source of information. They
constitute 34 percent of the consumers.
LATE MOJORITY:
They are doubtful and skeptical about the innovation of new products. They tend
to use the product not so much because of innovation, but because of other pressures –
non availability of the product and social pressures. They have less social status, and less
socially mobile then the previous group.
LAGGARDS:
They are more traditional. They possess limited social interaction and are
oriented to the past. They adopt the innovations with great reluctance. They constitute a
small portion of 16 percent of the consumers.
MARKET STRATEGY RELATED TO DIFFUSION:
There are differences in the early purchasers or innovators and late purchasers.
The strategy for the target market adopted, is a “ moving target market “ approach.
Diffusion Enhancement Strategies:
The idea is to find out the diffusion inhibitors and to eliminate them for the
enhancement of diffusion. For this the diffusion determinants are analyzed, and diffusion
strategies framed.
DIFFUSION DIFFUSION DIFFUSION ENHANCEMENT

DETERMINANT INHIBITOR STRATEGIES
Conservative
Type of group Try other marketers modern consumer
traditional
Give guarantees; reduce risk by
Perceived Risk High
endorsing with credible sources.

Choose media to reach all deciders and

Type of decision Group decisions
provide conflict reduction themes.
Extensive and aggressive marketing
Marketing Effort Limited
effort.
Distribute free samples to early
Trial Difficult
adopters. Use high service outlets.
Show importance of benefits use
Fulfillment of felt need Weak
extensive advertising
Stress attributes consistent with values
Compatibility Conflict
and norms
Relevant advantage Low Lower the price – redesign the product.
Use extensive marketing effort. Use
Complexity High skilled sales force. Use demonstration
of product.
Expose the product more through
Observables Low
promotion and advertising
INDUSTRIAL OR ORGANISATIONAL BUYER BEHAVIOUR

Organizational buyer behavior is important as it is done for the organization by a
group of human beings constituting the power center.
It is the decisions making process by which organizations establish the need for purchase
of products, and services, and identify, evaluate and choose among alternative brands and
suppliers.
DEFINITION: Organizational buying is a process by which a company and organization
establishes a need for purchasing products and choose among competing brands and
suppliers.
Decision Making Unit (Buying Center)
Major task of industrial marketer is to identify those individuals who are in any
way involved in purchasing decision process. Buying centre has common goal to achieve
which shares the risks arising from the decision. It is not unusual to encounter groups
consisting of 15 to 20 individuals.
In Industrial Marketing, these decision makers are referred to as the buying centre.

BUYING CENTRE ROLES

1. PRIMARY ROLES
Deciders: Organizational members who have decision making power and who decide
about the purchase (Ex: Engineer deciding specification or Vice President Finance)
Influencers: Individuals in the organization, influence the decision making process by
providing information on criteria for buying consultants. (Ex: Inside the organization –
R&D Specialist – Outside the Organization – Consultants.
2. SECONDARY ROLES
Users: They use the products thus, initiating the purchase process. They report on the
product performance (Ex. Worker.)
Buyers: Formal authority, high level officers, major role is selection of suppliers and
negotiating purchases (Ex; Purchase Department)
Gate keepers: Control the flow of information into buying centre identifies key buying
influence: (Ex: Receptionist, Secretary)
TYPES OF BUYING SITUATIONS:
1. STRAIGHT REBUY: This type of situation is found when there is repetitive or
routine basis order given by the buyer to older. (in) supplier. Reasons can be numerous –
small orders, satisfaction with present suppliers, time shortage etc., but this gives
opportunities for out suppliers to step in and even supply the real orders so as to step in
the organization. (Ex: when company faces a situation of computer stationary shortage,
company orders in routine, to the old supplier of computer stationery.)
2. MODIFIED REBUY: This situation occurs when buyer wants to modify any
purchase, which is improvement in product specification, price reduction, and change in
terms and conditions, etc. This poses a threat and opportunity to in supplier. Out supplier
can take this as a good chance to make an entry by meeting this expectation, (EX: if the
company has computer PC of 32 MB CD, now wants a new computer supplied to be of
64 MB).
3. NEW TASK: This is the most risky decision of buyer. Buyer goes for first time
purchase of product. Buyer does not have any previous knowledge, information or data
to compare. Naturally the buyer takes a lot of time to decide about the purchase. The

first supplier becomes the benchmark for the next purchases. Buyer’s advantage of
learning curve is not there.
This new task division requires maximum sales persons convincing. New task
usually involves more number of persons in buying centers compared to other two buying
situations, (Ex: company is planning to buy a palm top computer for the first time)
FACTORS INFLUENCING INDUSTRIAL BUYER BEHAVIOUR
1. ENVIRONMENTAL FACTOR
 Level of Demand Technology Improvement
 Economic Outlook Political Environment
 Value of Money Competition Level Changes
 Supply Conditions
2. ORGANISATIONAL FACTOR
 Objectives Organizational Structure
 Policies Organizational System Followed
 Procedures
3. INTERPERSONAL FACTOR
 Authority Empathy
 Status Persuasiveness
4. INDIVIDUAL PARTICIPANT
 Age Job position
 Income Personality
 Educational qualification Attitude towards risk


Consumer Behaviur

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Consumer Behaviur

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Study Material – Consumer Behavior

Department : Management Studies

Academic Year : 2010 – 2011

Trimester : Fourth Trimester

Subject Code : MBA M0901

Subject : Consumer Behavior

Name of the Faculty : K.SENTHIL

Designation : Sr. Lecturer

Note:- This will be only a guideline not a study material

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Businesses stay in business by attracting and retaining customers. They do this by

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

According to Loudon and Della Bitta, Consumer Behaviour is “ the decision

CONCEPTS AND COMPONENTS OF CONSUMER BEHAVIOUR

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

3. COMPETITOR: It is not possible to consistently do a better job of meeting

SIGNIFICANCE OF CONSUMER BEHAVIOUR:

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

THREE DIMENSIONS OF CB FROM CONSUMER’S PERSPECTIVE

THREE DIMENSIONS OF CB FROM MARKETER’S PERSPECTIVE

NEED FOR STUDYING CONSUMER BEHAVIOUR

THEORIES OF CONSUMER BEHAVIOUR

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

 Classical Conditioning & Operant Conditioning

DISCIPLINES HAVING INFLUENCE ON CONSUMER BEHAVIOR

S.NO DISCIPLINES COMPRISING OF (OR) GOVERNED BY

APPLICATION OF CB KNOWLEDGE IN MARKETING DECISIONS:

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

APPROACHES TO THE STUDY OF CONSUMER BEHAVIOUR

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Marketer Approach: It is important to understand or predict how consumers are likely

APPROACHES CORE PRIMARY PRIMARY

Economics Predict consumer choice Math – Modeling

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

CONSUMER BEHAVIOR MODELS

INDUSTIRAL CONSUMER BEHAVIOUR MODELS

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

In general, Nicosia Model is a comprehensive model of dealing with all aspects of

NICOSIA MODEL OF CONSUM

2. A MODEL OF INDUSTRIAL BUYER BEHAVIOUR

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

(2a)Product specific factors :

(2b) Company specific factors :

(3)Resolution of buying decision conflicts

(4) Influence of Situational Factors.

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

3. Webster and Wind Model of Industrial Consumer Behaviour

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

 Each members of the buying center is likely to have unique

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

INDIVIDUAL CONSUMER DECISION MAKING MODELS

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

7. Engel - Blackwell - Kollat Model

1.Physiological needs; food, wa

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

(a) Significative stimuli - Physical tangible characteristics, price , quality,

8. ENGEL - BLACKWELL - KOLLAT MODEL

9. MODEL OF FAMILY DECISION - MAKING

Prepared by : K.Senthil, Chettinad College of Engineering & Technology

Implications of the models in marketing decisions: