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Consumer Behaviour

Background
A definition of consumer behaviour
the decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods and services.

CB is a subset of Human Behaviour Behavioral Sciences have studied Human Behaviour

.contd
BS disciplines which have greatly contributed to our understanding of consumers are : Psychology : study of the behaviour and mental processes of individuals Sociology : study of the collective behaviour of people in groups Social psychology : study of how individuals influence and are influenced by groups Economics : study of peoples production, exchange, and consumption of goods and services Anthropology : study of people in relation to their cultural and racial heritage

Why Study Consumer Behaviour


CB affects, directly and significantly, decisions Decisions in the market place have other effects, in turn ! Micro perspective : understanding consumers for the purpose of enabling a co to accomplish its objectives; eg the need of advertising managers / product designers to understand the consumer Societal perspective : macro or aggregate level; collective behaviour of consumers; eg western world and automobile tptn cars, highway systems/services, petro prods, where many live and how daily life is run (shop, eating, entertainment)

Foundations of Consumer Behaviour (2 h)


Customer oriented marketing
..the need for studying consumer behaviour emanates from the demands of customer oriented marketing According to Marketing Experts Successful marketing requires that companies fully connect with their customers. Adopting a holistic marketing orientation means understanding consumers gaining a 360-degree view of both their daily lives and the changes that occur during their lifetimes. Gaining a thorough, in-depth consumer understanding helps to ensure that the right products are marketed to the right consumers in the right way

Customer Oriented Marketing


Consumers needs and wants, co objectives, integrated strategy Mkt-opportunity analysis, eg fitness centres/ eqpt Target-mkt selection, eg deodorant soap Irish Spring captured 15% mkt share Col Palm identified unique group thru segmentation Mktg-mix determination, eg expensive watches

Influences on Buying Behaviour


Cultural factors Social factors Personal factors

Consumer Buying & Consumption Process


Making a purchase with little or no influence from others Purchase involving joint decision Purchasing for someone else Purchase situation may involve at least one person in each such role, or a single individual can take on several roles Focus on actual buyer useful decisions..

Consumer Buying & Consumption Process (.contd)


Classification of roles
Initiator individual who determines that some need or want is not being met and authorizes a purchase to rectify the situation Influencer person who by word or action, intentional or unintentional, influences the purchase decision, actual purchase, and/or the use of the product or service Buyer individual actually making the purchase transaction User person most directly involved in the consumption or use of the purchase

(..contd)
Consumer behaviour involves
A mental decision process Physical activity Actual act of purchase is just one stage in a series of mental and physical activities that occur during this phase Some of these activities preceded the actual buying, while others follow it Consumption system who, how, when, where. All these factors capable of influencing the adoption of products or services

(.contd)
Primary psychological processes involved are Motivation Perception Learning Memory
We shall study these in details as we go along.

Consumer Decision Making Models


External environmental variables influencing behaviour culture, subculture, social class, social group, family, personal influences Individual determinants of behaviour learning / memory, personality/ self-concept, attitudes, motivation/ involvement Consumers decision process problem recognition, information search (internal & external), info processing, evaluating, purchase process, post-purchase behaviour Level of Consumer Involvement Decision Heuristics and Biases Mental Accounting

Researching the Consumer


Exploratory research consumer feedback, focus groups; primary objective is hyothesis formulation, ie forming a conjectural statement about the relationship between tow or more variables Conclusive research builds upon exploratory research; main objectives are to describe consumer behaviour and to offer explanations for its causes; also, behaviour forecast and methods of influencing it can be determined Market segmentation

Personal Factors (2 h)

Demographics
Age stage in life cycle : people buy different goods and svcs over a lifetime Gender differing needs, preferences Occupation influences consumption patterns; eg factory workers outfit vs co directors apparel, software engineer vs construction engineer Education fashions mindset, shapes choice process and preferences, can catalyse income

Economic Status
Buying behaviour vis--vis buy-not-buy or product choice greatly affected by economic circumstances Income : level, stability, time pattern personal income, disposable income, discretionary income The problem with specification of necessities and the usefulness of the concept of subjective discretionary income (SDI)

Needs and Motivation


Needs and motivation related to demographics and economic logic Different stages of life produce varying needs say, progression from toys to walking stick; similarly motivation amusement to functionality Economic circumstances form the logic of one mans luxury being seen by another as necessity

Level of Involvement and Decision Making Type


Involvement defined in terms of the level of engagement and active processing undertaken by the consumer in responding to a marketing stimulus
Is related to consumers values and self-concept, which influence the degree of personal importance ascribed to a product or situation Can vary across individuals and different situations Is related to some form of arousal

Involvement is characterised by intensity or degree of arousal and directional influence

(.contd)
Dimensions of involvement Antecedents : person, stimulus/object, situations a persons needs, values, interests, etc and closeness of the product (or stimulus) to these, in relation to the use (situational context) of the product govern involvement Properties of involvement Intensity : degree > high or low, ie how much a consumer will invest in decision making for purchase Direction : focus or target < strong influence of antecedents; eg women and perfume, men and cars Persistence : length of time consumer remains engaged; eg bird watchers, sport fishing, auto enthusiasts

(.contd)
High involvement decision making Low involvement decision making Flowing from the above : Central route (to processing) in which cognition and extensive critical evaluation leads to attitude formation followed by behaviour Peripheral route, in which cognition, at low attention, continues with weak brand knowledge and interest, without developing strong attitude about any of the specific brands; thus mere familiarity or association with non-central cues, like good shop ambience or salesperson, leads to decision Marketing strategies are tailored to account for these

Psychographics
Personality
A set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli Traits such as self-confidence, dominance, autonomy, deference, sociability, defensiveness, and adaptability Can be a useful variable in analyzing consumer brand choices Brands also have personalities, and consumers are likely to choose brands whose personalities match their own

(.contd)
Brand personality : the specific mix of human traits that may be attributed to a particular brand; eg one such identification
sincerity (down-to-earth, honest, cheerful) Excitement (daring, spirited) Competence (reliable, intelligent) Sophistication (upper-class and charming) Ruggedness (outdoor-type and tough)
Ruggedness levis, competence BBC, LH

Lifestyle
A persons pattern of living as expressed in activities, interests, and opinions Lifestyle portrays the whole person interacting with his or her environment Broadly, two segments : money-constrained (WalMarts target thru low prices bringing high sales) or time-constrained (breakfast on feet bagels rather than cereals) Lifestyle segmentation further into brand-user, product-user, situation segmentation..

Self-concept
Self-image > a persons perception of himself which includes his physical being, other characteristics such as strength, honesty, and good humour in relation to others, and even extending to include certain possessions and his creations How one views oneself actual self-concept How one would like to view oneself ideal self-concept How one thinks others see one others self-concept Affects publicly consumed products as compared to privately consumed goods; congruence with actual or ideal self-concept

Interpersonal Factors
Culture
Culture refers to the cumulative deposit of knowledge, experience, beliefs, values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations through individual and group striving. Culture is a collective programming of the mind that distinguishes the members of one group or category of people from another Culture consists of material and non-material components : Material culture: consists of all the physical substances that have been changed and used by people, such as tools, automobiles, roads, and farms; in the context of markets and CB, artifacts of material culture would include all the products and services which are produced and consumed, eg Big Bazaar, Spencers Non-material culture: includes the words people use, the ideas, customs, and beliefs they share, and the habits they pursue; eg the way in which consumers shop in supermarkets, our desire for newer and better products, and our responses to the word sale

Culture (.contd)
Significance of culture lies in
The understanding of the extent to which people are more than just chemistry, physiology, or a set of biological drives and instincts Thus, although all customers may be biologically similar, their views of the world, what they value, and how they act differ according to their cultural backgrounds

Culture & Marketing Decisions


Culture influences consumers historically acknowledged All activities people engage in are culturally determined All purchases of goods are made either to provide physical comfort or to implement the activities that make up the life of a culture ..an understanding of culture enables the marketer to interpret the reaction of consumers to alternative marketing strategies.

(.contd)
Culture manifests through National character Differences in subcultures such as blacks, Jews, and Hispanics in America, and regional population groups in India Silent language of gesture, posture, food and drink preferences, and other nonverbal clues to behaviour Symbols in society; semiotics how signs function within a culture ie anything that conveys a meaning : advertising uses this to invest products with meaning for a culture whose dominant focus is consumption Taboos, or prohibitions in a culture, relating to various things such as the use of particular colours, phrases, or symbols Ritualised activities in which people participate at home, work, or play, both as individuals and as members of a group. Such behaviour occurs in a fixed episodic sequence, and tends to be repeated over time

Cultural Manifestations
Cultural meaning can be communicated by consumer goods Commonly observed consumption rituals
Morning tea/coffee, newspaper, TV/radio news, weather, traffic Shower and grooming : items used Dresses for work : as appropriate Drives : car model En route visits temple, posts a bday card Business meetings / lunch En route home takes in a movie, beverage Home for dinner over TV, then bed

(.contd)
These activities are associated with various types of rituals : media, household, grooming, religious, gift-sending, business, eating,entertainment / recreation, bedtime Observe how rituals involve aspects of consumer behaviour processes in obtaining goods and services, exchanging them, or using and disposing of them

Characteristics of Culture
Culture(s) is / (are)
Invented : ideological system (ideas, beliefs, values, and ways of reasoning in defining what is desirable or not), technological system, organisational system Learned Socially shared Similar but different Gratifying and persistent Adaptive Organised and integrated Prescriptive

Cultural Values
Can be defined as
A widely held belief or sentiment that some activities, relationships, feelings, or goals are important to the communitys identity or well-being Or Centrally held and enduring beliefs that guide actions and judgments across specific situations and beyond immediate goals to more ultimate end-states of existence

(.contd)
Values produce inclinations to respond t specific stimuli in standard ways A specific behaviour is expected to either help or hinder the attainment of some value or group of values Consumers then, are motivated to engage in behaviours designed to enhance the achievement of certain values and to avoid those behaviours perceived to hinder the attainkent of certain value states Values vs attitudes

(.contd)
Values are culturally determined Values are learned from social interaction, largely from our families and friends in settings such as schools and other places of aggregation Values strongly influence consumer hehaviour; even though specific situations may dictate slightly different actions, overall there is much similarity in consumer behaviour within a given culture, such as in tastes, methods of shopping, etc A marketer must understand societys basic value structure so that strategy decisions are consistent with ingrained cultural patterns Much easier to harmonize with the culture than to attempt to change fundamental cultural values

Core Cultural Values


Individualism interrelated with ideas such as freedom, democracy, nationalism, and patriotism; founded on a belief in the dignity, worth, and goodness of the individual Equality Activity Progress and achievement Efficiency and practicality Mastery over the environment Religious and moral orientation Humanitarianism Youthfulness Materialism Social interaction and conformity

Values and Consumer Behaviour


Culture is a strong force in the consumers milieu affecting his or her choice of behaviour Marketers have long recognised the importance of appealing to consumers values in marketing Values guide actions, attitudes, and judgments

Illustrative Listing of Indian Contrasts


INDIAN VALUES Leaders are the servants Cooperation Group Emphasis Passive Informal Courtesy Patient Sharing Time - Constant Respect for Age Harmony with Nature Religion = Way of Life . . . Sacramental, Symbolic Non-verbal Extended Family Tradition No Eye-to-eye Contact Holistic Problem Solving . . . Vision of Total NON-INDIAN VALUES Leaders are the masters Competition Individual Emphasis Assertive Formal Politeness Impatient Saving Time - Fleeting Respect for Youth Conquest over Nature Religion = Segment of Life . . . Intellectual, Gnostic Verbal Nuclear Family Novelty Eye-to-eye Contact Analytical Problem Solving . . . Piece by Piece

Implications of Cultural Change


for the marketer
Values are dynamic, not static or fixed Cultural change may happen gradually, as an evolution, or rapidly; the latter places more stress on the system Marketers need
to understand that cultures do change and to appreciate the implications this may have for consumer behaviour
e.g. frozen foods

Cultural Change & Marketing Strategies


What the consumer wants, expects, associates Will affect product planning, pricing, distribution channels, promotion Increasing importance of market segmentation
Knowledge of consumer value orientations provides a measurable set of variables, related to needs, which gives the marketer deeper insight Growing diversity of individual tastes, abetted by increasing incomes and the concept of pleasure Finer segmentation of the market on the basis of value profiles

Cross-cultural Understanding of Consumer Behaviour


Global outlook Cultural differences among international and regional markets, influence consumer behaviour Time Thought and communication process Personal space Materialism and achievement Family roles Religion Competitiveness and individuality Social behaviour
e.g. Goodyear : found consumers make three key decisions when buying tyres outlet, brand, and price and the sequence of their pairing critical; identified four groups for global marketing purposes : quality buyers, value buyers, price buyers, and commodity buyers. While segment sizes vary from country to country, the elements in each segments profile remain largely the same; the extent to which these elements vary determines how Goodyear must customise its marketing programs

Decision areas for the International Marketer


Elements of CB analysis in a cross-cultural setting
Determine underlying values and their rate of change; what are more strongly held Evaluate the product concept as it relates to this culture : does it harmonize with current and evolving values; what changes; positive values; satisfies what needs Determine characteristic decision-making process Determine appropriate promotion methods Determine appropriate distribution channels Determine appropriate pricing approaches

Market Segments
As in domestic, successful marketing in international also requires mkt segmentation Illustrative case of one survey identifying across 14 countries, five distinct global segments with shared attitudes, values, actual purchasing patterns:
Strivers Achievers Pressureds Adapters Traditionals But their consumption pattern can be distinct

Marketing Strategies
Across boundaries-cultures, separate marketing mixes and programs may be needed
Product considerations : home appliances use in Germany vs Spain 128 : 54 Promotion considerations Distribution channel considerations Pricing considerations

Indian Culture & Changes


Cultural values in India are good health, education, respect for age and seniority. But in our culture today, time scarcity is a growing problem, which implies a change in meals. Some changes in our culture: 1.Convenience: as more and more women are joining the work force there is an increasing demand for products that help lighten and relieve the daily household chores, and make life more convenient. This is reflected in the soaring sale of Washing machines, microwaves, Pressure cookers, Mixer grinders, food processors, frozen food etc. 2.Education: People in our society today wish to acquire relevant education and skills that would help improve their career prospects. This is evident from the fact that so many professional, career oriented educational centers are coming up, and still they cannot seem to meet the demand. As a specific instance count the number of institutions offering courses and training in computers that has opened in your city.

(.contd)
3. Physical appearance: Today, physical fitness, good health and smart appearance are on premium today. Slimming centers and beauty parlours are mushrooming in all major cities of the country. Cosmetics for both women and men are being sold in increasing numbers. Even exclusive shops are retailing designer clothes.
4.Materialism: There is a very definite shift in the peoples cultural value from spiritualism towards materialism. We are spending more money than ever before on acquiring products such as air-conditioners, cars CD players etc, which adds to our physical comfort as well as status.

Subcultures
Culture - consists of basic behavioural patterns which exist in a society However, all segments of a society may not have the same cultural patterns Within the heterogeneous national society more homogeneous subgroups can be distinguished These groups are subcultures having values, customs, traditions, and other ways of behaving that are peculiar to a particular group within a culture, eg students, academics, professional sportspersons, musicians, etc Individuals may be members of more than one subculture; thus marketers must identify the most relevant sub..

Sub-cultural Segmentation
Marketers also segment overall societies into smaller subgroups (subcultures). A subculture consists of people who have the same ethnic origin or customs or behaviors. Sub-cultural divisions are based on various sociocultural and demographic variables such as nationality, religion, geographic locality, race, age, and gender CB in the sub-cultural context explores marketing opportunities created by specific sub-groups within society

Two Broad Subcultures


Ethnic normally minority group of a society; identification based on what a person is when born; descend from common forbears; tend to reside in the same area, distinct from other groups, over generations; marry within; share a common sense of peoplehood (kindredness) Commonly, three ethnic types race, nationality, religion

Two Broad Subcultures (.contd)


Age
youth subculture olders subculture

Youth Subculture
Money to spend discretionary almost entirely Primary purchaser product patterns clothes, music, entertainment, travel, cosmetics, fashion accessories, electronic items (including games) Style, colour, make, model Emergence of brand loyalties; may be long lasting Shopping behaviour rely more on personal sources for information on high value products and on media for others At the product evaluation stage, price (.discounts) and brand perceived as important Promoting to youth all media; gimmicky ads, use of celebrities, sports themes, humour

Olders Subculture
Product p brand, demand guarantees and warrantees, less experimenting unless recommended Shopping behaviour near homes, store loyalty particularly with high income and high value, value for money Promoting all media; quality, comfort, independence

MajorIndian Sub-cultural Categories


Categories
Nationality

Examples

original nationality : indian, nepali, bangladeshi, pakistani ancestral pride is manifestedin CB termsby their consumption of ethnic foods, travel to the homeland, purchase of ethnic cultural artefacts, art, music

Religion

hinduism, islam, buddhism, jainism, christianity (140 different organised religious subcultures symbolic and ritualistic products Geographical regions NorthIndian, SouthIndian, North Eastern, Western, Eastern, etc many languages, food habits, clothing, etc Race Aryan (high consumption/ experimental/ flamboyant), Dravidian (conservative/ subtle/ non-experimental), Mongoloid (fashion conscious/ trendy/ techno-inclined) Age appreciate different music, movie, lit, clothing between generations

(.contd)
Gender Traditionally society assigns certain traits to males and females M ales: aggressiveness, competitiveness, providers F emales: gentleness, talkativeness, neatness, nurturers W ithin every society certain products are either male or female eg.Cigars, pants, ties-males and colognes, hair dryers, hair spraysfemales internet use: Males seek out investments, free software, discovery;females-reference materials, online books, medical information Men are likely to purchase more on the internet than women because of the latters concern with privacy and security Occupation govt, business, professional, exec Social class upper, middle, lower

Social Class
A group consisting of a number of people who have approximately equal positions in a society Positions may be achieved or ascribed/ inherited Opportunity may exist for upward or downward movement to other classes

Basic Characteristics of Social Class


Social class exhibit status linked to status ie ones rank in the social system, as perceived by other members of society Symbols of status the need for prestige and how products satisfy this; the attributes of such products Blurring of symbolism technology, mass marketing, functionality, upward shift of products S c are multidimensional not determined solely by one criterion; mix of occupation, income, heredity S c are hierarchical vertical order S c restrict behaviour stay within a class due common traits S c are homogeneous similar attitudes, activities, interests, and other behaviour patterns thus similar media, purchases, shopping locations; which marketers can take advantage of thru suitable mktg mixes S c are dynamic closed and open systems; if latter, people can move up or down thru achievements

Social Class categorisation


Upper, middle, lower Upper-upper, lower-upper, upper-middle, lowermiddle, upper-lower, lower-lower Problems in measurement : based on an average of the persons position ignoring inconsistencies like high income-low education; assumed to be stable ignoring mobility; ignores reference group effects from other classes; examines usually only the adult male wage earner in the family

Role of social class in segmenting markets


S c and income related to lifestyle patterns S c and income related to consumer behaviour patterns product purchase patterns : shopping habits, store preferences, and media usage S c may not often be a relevant basis ie segmentation by other criteria, eg age / gender, more appropriate For undifferentiated products benefits may be less S c segmtn is usually more effective when used in conjunction with addl variables eg life-cycle stage, ethnic group

Social Class and Consumer Behaviour


Products and services consumed Shopping behaviour Promotional response patterns Price-related behaviour

Reference Groups & Opinion Leaders


Group consists of people who have a sense of relatedness as a result of interaction with each other Or Two or more individuals who share a set of norms, values, or beliefs and have certain implicitly or explicitly defined relationships to one another such that their behaviours are interdependent Classification of groups by Content or function Degree of personal involvement : primary and secondary Degree of organisation : formal and informal Group properties status, norms, role, socialisation, power

Reference Groups
Reference groups are those an individual uses (ie refers to) in determining his judgments, beliefs, and behaviour OR one whose presumed perspectives or values are being used by an individual as the basis of her/his current behaviours use as guide for behaviour in a specific situation

Types of Reference Groups


Membership Nonmembership
Anticipatory aspirational group Symbolic aspirational group
Positive versus negative

Influence on consumers group properties (ref. Sl. 59)

Reasons for reference-group influence


Informational benefits Utilitarian benefits Value-expressive benefits- +ive / -ive may come into play Comparative influence

Variability of reference-group influence on consumers


Variability among products conspicuousness; seen or identified by others; influence on prod purchase or choice of brand; publicly / privately consumed luxury / necessity : impact on prod / brand Variability among group urge to conform : group cohesiveness; proximity to grp members; indivs relationship; similarity to grp characteristics, outlook, values Variability among individuals personality; social character; demographic Variability by type of influence type of product and relevance of the influence in terms of informational, utilitarian, value-expressive Variability by situation nature of the consumer situation and the reference influence connect : patronage of retail stores, home maintenance services, etc

Opinion Leaders
People who are able to exert personal influence on others, in a given situation Ability to influence others through verbal communication, as others seek advice and info Can influence +ively or ively Consumers tend to be influenced by those with whom they identify O L present in every group and each status level, but may be more functional at higher income / status level

Characteristics of Opinion Leaders


Long-term involvement with the product category enduring involvement Enhanced knowledge about the product, leading to opinion leadership Tends to be product specific Functionss through communications and observations Usually within the same social-class, but viewed as of higher status Tend to be more gregarious and willingness to act differently Greater exposure to mass media, relevant to their interest Expertise and sociability Tend to be older in age, particularly in eastern world, eg India, Indonesia, Korea value maturity

Situations
High involvement product purchase seek info and advice Low involvement purchase less likely to seek direct opinion; but may observe others group members, esp those viewed as leaders Stimulating opinion leadership marketers can advertise with endorsement of health related products by doctors Generate communications concerning a product by sending samples to potential and influential customers cosmetics to beauty clinics; salesmen and retailers can encourage current customers to pass on to others by word-of-mouth Market mavens neighbourhood expert

Family
A type of small group Often predominant in its influence over consumer behaviour Primary group (characterised by intimate, face-to-face interaction) Reference group (with members referring to certain family values, norms, and standards in their behaviour) Strongly bonded group, functioning as an economic unit, earning and spending money Thus individual and collective consumption priorities, decide on products and brands, where to buy, how to use to further family members goals Moulded often by the family they grew up in

FLC
Bachelor stage Newly married couples Full Nest I Full Nest II Full Nest III Empty Nest I Empty Nest II Solitary Survivor I Solitary Survivor II Income and needs vary with change in the FLC stages - buying behaviour will differ accordingly

Non-traditional FLC
Some of the stages identified : Bachelor I Young couple : female head; married/ unmarried; no kids Full Nest I : female head; md / unmd; kid<6 Single Parent I / II Delayed full nest : female head 35-64; youngest child 6 or +

Family Decision-making
When two or more members are involved as opposed to individual decisions How money is to be spent Role structure (instrumental and expressive; initiator, influencer / opinion leader, info gatherer, decision maker, purchaser); power structure (patriarch, matriarch, equalit); resolve conflict

(.contd)
Husband / wife influences : H tends to dominate in products like hardware, sports eqpt, financial svcs, etc W tends to dominate womens clothing, toiletries, groceries, kitchenware, child clothing, etc Autonomous decisions womens jewellery, cameras, mens casual clothing, toys and games Joint decisions fridge, furniture, TV, family car; greater tendency for this now, with influence of working wives

(.contd)
Implications for marketers depending on who decides :
Media selection Advt msge target Requirement of separate ad campaigns

Education, occupation, and income of hus/ wife shapes who tends to decide; the better person does so Increasing influence of children
Perceived knowledge of prod, importance to them, more purchasing power The effects of authoritarian parents, neglecting, democratic, permissive

Interpersonal Factors and Symbolic Consumption


As recognized since long, consumption serving to signal social status, group membership, or self-esteem is a socially contingent activity The corresponding expenditures are motivated mainly by the symbolic value they have for transmitting the signal This presupposes some form of social coordination on what are valid, approved symbols Unlike consumption not serving signaling purposes, the technological characteristics of the goods and services consumed may be secondary that counts is their socially agreed capacity to function as a symbol

Consumption central to meaningful practice of daily life Consumption choices not only from products utilities, but also symbolic meanings Not only to create and sustain self, but also to locate in society The latter may also enslave us in the illusive world of consumption