21 Lecture 01 Libre

8/12/2019 21 Lecture 01 Libre

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Copy Right : Rai University

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UNIT I

INTRODUCTION

CHAPTER 1:

THE STUDY OF CONSUM ER BEHAVIOUR

LESSON 1:

INTRODUCTION TO CONSUMER

BEHAVIOUR

IntroductionAs a consumer we are all unique and this uniqueness is reflectedin the consumption pattern and process of purchase. The study

of consumer behaviour provides us with reasons why consum-ers differ from one another in buying using products andservices. We receive stimuli from the environment and thespecifics of the marketing strategies of different products andservices, and responds to these stimuli in terms of either

buying or not buying product. In between the stage of receivingthe stimuli and responding to it, the consumer goes throughthe process of making his decision.

ObjectivesAfter reading this lesson you should be able to:

Understand the development of the marketing concept.

Define customer value, satisfaction, and retention.

Exploring the link between marketing and Customerorientation

Definition, role and importance of consumer behavior fora marketer

Identify the major factors that influence a consumerspurchase decision and behavior

A simplified model of the consumer decision-makingframework

Define consumer behavior.

Describe the societal marketing concept.

1. M arket ing and Custom er Orientat ionTo introduce you to the concept of consumer behaviour, let usfirst understand about the discipline of consumer behaviour inrelation to marketing.

1.1 What is Marketing?

Marketing on the one hand is a business philosophy and on theother an action oriented process. The philosophy - also termedas marketing concept - has its roots in market economy. Thereare four critical ideas that form the foundation of such aneconomy:

Individuals pursue their self-interest to seek rewardingexperience

Their choices determine as to what would constitute suchexperience, the choices themselves being shaped bypersonal (taste) and external (cultural) influences.

Consumers enjoy the freedom to choose; they aresovereign.

This freedom ensures free and competitive exchangebetween buyers and sellers.

Marketing in turn is based on these four principles.

Thus Marketing can be defined as a

Process that aims at satisfying individual and organiza-tional needs by creating, offering and exchanging

competitively made products that provide value to the

buyers

Today our focus is on customer. Objectives like revenue, profit,market share, etc. Re important, but they will flow only byacquiring customer competence. In our country particularly thecustomer, even as late as in 1980s, was bereft of alternatives; hewould uncomplainingly buy whatever the seller dished out. Notany more. Todays choice empowered customer, supported by acompetitive environment, global quality, and new economicrealities, decides the fate of the marketer.

So lets define Marketing once more: It is a total businessphilosophy aimed at identifying the needs of each customergroup, then designing and producing product / service package

so as to serve the groups more effectively than the competi-tors.

This definition reveals three key dimensions of marketing:

It seeks to identify customer needs: Many manufacturerswould know all there is to know about relevant productiontechnology, but nothing about their customers wants.They may design products with fancy features withoutconsidering the perceived value of such features to their

buyers. Then they wonder why their sales staff fails topush the product in the market.

Marketing attempts to select customer groups for

which it can develop a competitive edge: Companies

taking a shotgun approach - meaning all things to allpeople - inevitably end up with sackful of unsold productinventories. Those companies which concentrate theirlimited resources on meeting specific needs of thecustomer have better chances of succeeding.

It designs and produces the right product packages:when a company attempts to sell a Mercedes while thecustomer is demanding a Zen sized car, failure will greet itwith open arms.

1.2 Major Concepts in Marketing

A course in Consumer Behaviour uses certain terms repeatedly.It would be desirable therefore that you learn their meaning

from the beginning itself.Needs and Want sThe satisfaction of buyers needs is at the heart of a marketeconomy, and is the core theme of Marketing. To put it moresimply, a need is a feeling of being deprived of somethingdesirable.

You may be in a state in which you are not feeling satisfied (sayyou are feeling hungry). So you visualizea more desirable (butunattained, yet) state, that of having a full stomach. Hence there


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is a gap between your current state (hunger) and desirable state(satiated palate). This gap leads to a need being felt.

To take another example, if you had been happy with youralready attained qualifications, you would not have enrolled forthis course!

Wants are somewhat different. While needs are basic to humanbeings, (since nobody ever needs to tell us that we need to feelhungry, thirsty, etc.) wants are not. Later in our life when we

become part of various informal and formal groups (family,

friends, school, club, workplace, etc) we develop the concepts offriendship social approval, beauty, and so on. These are ouracquired needs. The product concept that adequately satisfiesour biogenic or acquired needs becomes successful. Infact the

job of the marketer is to identify unfulfilled / inadequatelyfulfilled / partially fulfilled need. But then today a need can bemet in a number of alternative ways. A variety of products cansatisfy the same need. Wants exist for those objects that canpotentially satisfy a need. A visually impaired person can eitherwear spectacles, contact lenses, or now he can go in for correctivesurgery.

At this point we must also note that a consumers behaviour is

conditioned by the perception about a marketers offering. Thisperception may or may not match reality. For example, in Indiaa common perception is that ready to eat food items lack thathome touch; they are cold and clinical. Homemade foods in contrast are warm and live unlessthis perception is changed, acceptance of suchproducts is likely to be limited.

Product / Service

If we use marketing parlance a product is anythingthat can satisfy our needs and wants. That is, it could

be a physical object, or a service, or an idea whichcan be offered to a potential user for adoption /practice / consumption. By studying consumer

buying behaviour companies can identify needsthat can be met by offering a suitable product.Incidentally, a customized product is one, whichis made according to individual customersspecifications.

Exchange

A marketer makes an offer because he hopes thatthe buyer will accept it. And in turn the buyer willgive something of value to the marketer. Whether or not anexchange will take place would therefore depend on a match/mismatch between the gain (the satisfaction receivable) and thesacrifice (the price payable) in customer perception.

1.3. Customer Focus

In India marketing as a discipline has evolved at a leisurely place,dictated of course by circumstantial factors. Most markets beingsellers markets (i.e. where seller dominates over the customer)until recently, marketing philosophy was an alien concept for anIndian seller. In a broad sense all the markets can be dividedinto two categories: sellers marketandbuyers market.A buyersmarket is one where due to prevailing intense competition

among the sellers, and consequent excess of supply overexisting demand, the buyer rules over the seller. On the otherhand, in a sellers market competition is restricted for anynumber of reasons. So the buyer is at the mercy of the seller.

Pause For Thought #Can you say why people brush their teeth? Answer seemssimple. But now check against the following: Those who arehypochondriacs are concerned about germs and are swayed by adecay prevention appeal. Another group, mostly extroverts,

brushes teeth to give them brightness and shine. But a majorityjust want a tingling, fresh sensation as a part of their ritual ofstarting a day fresh. Such research makes the marketers betterprepared to meet the needs of various categories of customers.

1.4. Consumer Focused Marketing

Once a marketer identifies an unfulfilled need, or partiallyfulfilled one, he has an opportunity to exploit. To this end hehas to determine the appropriate marketing mix. According toStanton: Marketing Mix is the term used to describe thecombination of the four inputs that constitute the core of acompanys marketing system: the product, the price structurethe promotional activities, and the placement system. Themarketer has to track the consumer behaviour constantly andadjudge an optimal combination of these marketing mix

PRODUCT PRICE PROMOTION PLACEMENT

Basic product

and its features.

Design, quality,model, style,

appearance, size

Packaging and

labeling

Branding and

trademark Service: Pre,

during, post sale.

Basic

price,

discounts,rebates.

Paymentterms,

installment facilities

Pricefixation;free or

administered price

Personal

selling; sales

forcecharacteristics

Advertising,media, and

messagechoices

Salepromotion,displays,

contests, etc.

Publicity and

public

relations.

Channels of

distribution:

types ofintermediaries.

Physicaldistribution,

warehousing,etc.

factors so that best sales are generated. Any mistake or delay cancost a marketer dear.

Figure 1.1: marketing mix variable

Product

We as customers view a product as a bundle of satisfactionand not merely the physical object. We gives importance to boththe tangible and intangible attributes of a product. Intangiblesprovide psychological and social benefits for the buyer. Ifproduct attributes dont benefit a customer, they have nosignificance for him. That is why during 2000-2001 midsize carshad a better sales growth rate than smaller cars; Maruti-800 salesactually declined.


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Branding

A firm brands its product to provide it a distinct identity. Abrand carries brand equity, i.e., reputation. Losing brand equitymeans losing sales. For example, this happened to Limca at thetime of the BVO controversy.

Packaging

For the customer packaging is both a protective and a promo-tional device: Package is the message, as it is called. Packagingfacilitates brand identification and may even motivate a person

to buy a product (like perfume). It serves as a critical reminder atthat critical moment when the customer is choosing fromamong several competing brands. Infact whenever a customervisualizes about a product, its packaging is the first thing that hesees in his mental eyes.

As a test, just think about Pepsi or Coke right now. The firstthing you will do is visualizing the distinctive shape of the

bottle!

Product Life Cycle

Like us human beings, products also take birth throughintroduction, develop (grow), age (mature), and eventuallydecline (die). In the first phase, a newly developed product is

introduced in the market, which finds relatively few customers.If it is an innovative product (say a perfumed fabric) then themarketer stimulates primary demand by educating the cus-tomer. In the growth stage, more and more customers start

buying. But new brands also enter the market. Hence themarketer has to talk about differentiating features of his brand.In maturity the brand competes with other successful brandsfor selling in a stagnant market. So price cuts, exchange offers oradd-ons are used to woo the customers.

Communication is image based attempting to perfect andreinforce the brand loyalty. Finally, many products face a phaseof obsolescence. Some products may of course have a cyclicaldemand pattern. They bounce back after a gap. For example, in2001 larger frame sunglasses have comeback. The marketer mayeven reformulate/reposition a product to begin a new life likeDabur Honey or Milkmaid. On the other hand some productshave a stillborn fate or may die an infantile death, like RealValue Vacuumizer.

Pricing

Price has to be fixed in such a manner as on one hand it is loweror equal to the value delivered by the product, and on the otherhand it should cover at least all manufacturing and postmanufacturing (transportation, warehousing, promotional)costs plus the targeted level of profit margin. Actual price fixingof course depends on the functional features of the product

and the image of the brand. Then there is the degree ofcompetition that dictates the price of a brand vis--vis itscompeting brands-. That is why you would find Pepsi andCoke priced at same level.

Price can also act as a communication tool. For example pricepackage may give the message of affordability, exclusiveness, etc.Cartier watches, for example.

Placement

Physical distribution is the third dimension of marketingactivity. Place convenience is needed to make purchase. Amarketer has to decide about two things: Keeping in mindcustomers requirements, first, what will be the channel ofdistribution; and, second, how will the goods be actuallydistributed.

Physical distribution activities are related to the movement ofproducts from the production site to purchase point. While the

buyer must get it in right shape and at right time, the sendershould be able to ensure availability at minimum cost to him.

The marketer can either sell directly to the customers or throughmiddlemen. A typical distribution chain could include move-ment of product from manufacturer to wholesaler to retailer tocustomer.

Promotion

Promotion is also called marketing communication. It aims atinforming and persuading the customer to buy whatever themarketer is offering. Since a customer can be reached through anumber of channels, companies undertake integrated commu-nication, which is a combination of personal selling,

advertising, public relations, and sales promotion.

1.5. Emerging Imperat ives

Customer of today is the arbiter of corporate destiny. He isunrelenting, demanding, and finicky. He wishes to fulfil hisneeds in the most cost effective manner. Consumer spendingsare rising rapidly, while savings rate in India is falling. AlyquePadamsee says: This is the land of Karma, where everything isworked out for you, your destiny your kismet. But the Genera-tion Now feels The hell with waiting for reincarnation! Theyare breaking the Karma handcuffs. They are deciding that whatthey want is a better life now. If they have money they want tospend it now. But they are spending, intelligently, not indis-

criminately. What are the todays realities? Todays customer is exposed to international quality,

thanks to the entry of more players - from within Indiaand abroad - in the market in post liberalized India.

So he dictates specifications, quality standards, and evenchargeable price.

He wants everything here and now.

Both budget shoppers and high spenders are demandingbetter return for the money they spend.

This in turn has several lessons for the marketers:

A marketer has to act like a long-term investor.

He has to be prepared to accept wafer thin profit margins. Hence all the planning processes and the people of the

organization have to be configured around the centralcharacter, viz., and the customer.

Marketing effort has to be directed at meeting customerneeds, and not earning profits, or building markets. Thelatter will of course be a fall out of the customer focus.

In the competitive world, the marketer has to strategize todeliver customer value greater than that provided by hiscompetitors.


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In brief there has to be a paradigm shift. The corporation has to exist for the customer; the company has to customerize itself. Suchan organization will have to establish a link between itself and the customers in the following manner:

Customer needs assessment

VALUE ADDED PRODUCT

Develop Manufacture Market Deliver

Keep customer needs infocus.

Reduce developmentcycle time

Develop customer-oriented products.

Redesign the factory tomeet customer needs.

Reduce manufacturingcycle time

Produce at the lowestcost, but no qualitycompromise.

Identify and target thecustomers.

Process the demand indouble quick time.

Market customizedproducts.

Deliver to thetargeted customers.

Reduce deliverycycle time.

Deliver morevalue for samemoney products

2. Diversity in M arket PlaceWe as consumers differ in age, gender, education, occupation,marital status, activities & interests, preferences, opinions, foodsthey eat and products we buy.

There is diversity among marketers; not only among producersbut also sellers. Traditional retailers, mass merchandisers,discount stores, and off-price stores. But there has been a shiftfrom mass marketing to niche marketing to direct marketing,from custom catalogs to television shopping to cyber shopping.

There is a great diversity in advertising media. In addition to thetraditional broadcast and print media, we have ethnic mediawithin a great variety of alternative media.

Recognizing the high degree of diversity among us, consumerresearch seeks to identify the constants that exist among thepeople of the world.

Figure 1.3 below shows us how consumers have changed overthree decades. In fact, you can see in your own family, if youtake your parents as buyers and yourself as a buyer and then seethe difference in your behaviour.

Fig 1.2 essence of customer orientation.

1980s 1990s 2003Conspicuousconsumer

Frugal consumer,becoming morewell-off

Suspicious butgenerally well-ofconsumer

Image-driven Value- andquality-driven

Highly eclectic

Trusting Skeptical andcynical

A prove itattitude

Brand loyal Does not exhibitloyalty

Believe that there isalways somethingbetter

Emotional buyer Informed buyer Highly informedand specialized

buyerDreamers Escapists Focused on

personal needsOverindulgent Health- and

wellness-conscious

Health, wellness,and someoverindulgence,without expectationof costs orconsequences

Overworked Burned out,stressed out, andplacingtremendousvalues on

convenience andtime

Reliant ontechnology andtelecommunicationsto save time inmaking purchasing

decisions

Industrious babyboomers

Responsible babyboomer

Unconvincedgeneration Xer

Changes in Consumer Behaviour

Fig 1.3 Changes in consumer Behaviour;Source: Adopted from Principles of Marketing, Kotler,Adam, Brown and Armstrong

The commonality of need constitute a market segment,enabling the marketer to design specific products or promo-tional appeals to satisfy the needs of that segment


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To match the varying consumer tastes and behaviour, marketershave also adopted strategies like stressing on value pricing i.e.,high quality at a reasonable lower price and relationshipmarketing which in simple words would mean servicing to addto customer delight which can in the long run result in brand orstore loyalty).

They have also taken steps by moving away from the traditionaldistribution channels, to customized designed channels andnow to direct marketing or to selling directly to the customers.

Some changes in the major segments of life we can identifyare as follows:

Primary needs- health, hygiene, basic foods and clothing.

Living stylesexpressed in products such as jeans, funfoods, CDs.

Imitation of the affluentand ego based life stylesexpressed in expensive watches, luxury cars.

High technology to match global competitiveness-faxes, e-mail, Internet, photocopying machines along withCAD, CAM and imaging.

The challenge before the marketer is to determine the

appropriate marketing channels and consumerpsychographics to have a better understanding of thebehavour aspects of target market.

In spite of being surrounded by diverse goods andservices, and the freedom to choose the desiredproduct or service, there are also many similaritiesfound among consumers.

Caselet #1

During 1996-1999 Ford Escort sold only 13,000 units sincecustomers perceived in it real and imaginary problems. Itearned the ill reputation of being a stogy car. Through it wasa failed model, and has been withdrawn now, the company

used it as a learning experience for developing a car exclu-sively for the Indian market, the IKON. First of all itdecided to understand the customer, abandoning theconventional demographic route and decided to focus onpsychographics. It asked the all-important question aboutIndian attitude towards life and role of car in it. It identifiedsix distinctive customer clusters out of which it decided toaddress two: the affluent puppy (young upwardly mobileprofessional Punjabi), and the full of life. The former andthe latter perhaps own a popular car already, are partyanimals, and enjoy fast and flashy lifestyle. Further, thiscompany decided to focus more on second i.e., full of lifesegment since this category partly subsumes the first one.

The car was named the josh machine. It turned out to be agreat success. So we learn the lesson.

If we look at consumer Behaviour as a discipline, we can

say that:

We as consumers did not always act or react as marketingtheory suggested they would.

Accelerated rate of new product development

The consumer movement

Public policy concerns

Environmental concerns

The opening of national markets throughout the world.

Let us now look at the scope of Consumer Behavior. Thescope covers:

What they buy

Why they buy

When they buy

Where they buy it

How often they buy it

How do they buy it

Activit y 1Given the geographical characteristics of Indian consumermarket, analyse five important implications that will be faced byan all-India distribution company dealing in consumer durablessuch as refrigerators, televisions and music systems:

A well-developed and tested model of buyer behaviour isknown as the stimulus-response model, which is summarisedin the diagram below:

Fig 1.4 The Stimulus response model of Buyingbehaviour


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In the above model (fig 1.4), marketing and other stimuli enterthe customers black box and produce certain responses.

We must try to work out what goes on the in the mind of thecustomer or the black box.

The Buyers characteristics influence how he or she perceives thestimuli; the decision-making process determines what buying

behaviour is undertaken.

2. Factors Inf luencing Buyer BehaviourWhenever we buy anything our final decision, as a consumer

will definitely be affected by certain factors. Some of these majorfactors are as given below:

1. Cultural

2. Social

3. Personal

4. Psychological

The first stage of understanding buyer behaviour is to focus onthe factors that determine he buyer characteristics in the black

box. These can be summarised as follows:

Fig 1.5 Factors affecting Buyer behaviour

Each of these factors is discussed in more detail in our otherrevision notes on buyer behaviour.

The marketer must be aware of these factors in order todevelop an appropriate marketing mix for its target market.

Now lets take a brief look at the various factors that we havementioned above.

2.1 Cultural Factors

Culture is the most fundamental determinant of a personswant and behaviour. The growing child acquires a set of values;perceptions, preferences and behaviour through a process ofsocialization involving the family and other key institutions.Cultural factors have a significant impact on customer

behaviour. Marketing are always trying to spot cultural shiftswhich might point to new products that might be wanted bycustomers or to increased demand.

For example, today there seems to be a cultural shift towardsgreater concern about health and fitness and that has createdopportunities, now even industries, servicing customers whowish to buy products like:

Health foods

Fitness club memberships

Exercise equipment

Activity or health-related holidays etc.

Similarly our increased desire for leisure time has resulted inincreased demand for convenience products and services such asmicrowave ovens, washing machines, ready-to-eat meals anddirect marketing service businesses such as telephone bankingand insurance.

Each culture contains sub-cultures groups of people,which share values. Sub-cultures can include nationalities,religions, racial groups, or groups of people sharing the samegeographical location. Sometimes a sub-culture will create asubstantial and distinctive market segment of its own.

For example, the youth culture or club culture has quitedistinct values and buying characteristics from the much older

grey generationSimilarly, differences in social class can create customer groups.In fact, the social classes are widely used to profile and predictdifferent customer behaviour. Social class is not just determined

by income. It is measured as a combination of occupation,income, education, wealth and other variables. Social Classes arerelatively homogeneous and enduring divisions in a societywhich are hierarchically ordered and whose members havesimilar values, interests and behaviour.

Social scientists have identified seven social classes shown

in Figure 1.6

Social Class Characteristics

Upper- Upper

Upper-Uppers are the social elite who liveon inherited wealth and have well-knownfamilies. They maintain more than onehome and send their children to the bestschools. They are in the market for jewelry,antiques, homes, and foreign vacations.While small as group they serve as areference group to others to the extent thatother social classes imitate theirconsumption decisions.

Lower-Uppers

Lower Uppers are persons who have earnedhigh income or wealth through exceptionalability in their profession or business. Theyusually come from the middle-class. They

tend to be active in social and civic affairsand seek to buy the symbols of social statusfor themselves and their children, such asexpensive cars, homes and schooling. Theirambition is to be accepted n the upper-upper status, a status that is more likely tobe achieved by their children thanthemselves.


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Fig 1.6: Adapted from Richard P. Coleman The Significance ofSocial class to Marketing. Journal of Consumer Research,December 1983, pp 265-80

2.2 Social Factors

A customers buying behaviour is also influenced by socialfactors, such as the groups to which the customer belongs andsocial status. In a group, several individuals may interact to

influence the purchase decision. The typical roles in such a groupdecision can be summarised as follows:

Initiator

The person who first suggests or thinks of the idea of buying aparticular product or service

Influencer

A person whose view or advice influences the buying decision

Decider

The individual with the power and/or financial authority tomake the ultimate choice regarding which product to buy

Buyer

The person who concludes the transaction

User

The one who actually uses the product or service.

The family unit is usually considered to be the most importantbuying organisation in society. It has been researchedextensively. Marketers are particularly interested in the roles andrelative influence of the husband, wife and children on thepurchase of a large variety of products and services.

There is evidence that the traditional husband-wife buying rolesare changing. Almost everywhere in the world, the wife istraditionally the main buyer for the family, especially in the areasof food, household products and clothing. However, withincreasing numbers of women in full-time work and many men

becoming home workers (or telecommuting) the tradi-tional roles are reversing.

The challenge for a marketer is to understand how this mightaffect demand for products and services and how the promo-tional mix needs to be changed to attract male rather thanfemale buyers.

Consumer wants, learning, motives etc. are influenced byopinion leaders, persons family, reference groups, social classand culture.

2.3 Personal

Personal factors are those factors, which are unique to aparticular person including demographic factors, Sex, Race, andAge etc.

Personal factors also include who in the family is responsible forthe decision-making.

2.4 Psychological Factors

Psychological factors include:

MotivesA motive is an internal energizing force that

orients a persons activities toward satisfying a need orachieving a goal.Actions are effected by a set of motives, not just one. Ifmarketers can identify motives then they can better developa marketing mix.MASLOW hierarchy of needs is the theory, which explainsconcept of motivation through unfulfilled needs whichcould be any of the following:

Physiological

Safety

Love and Belonging

Esteem

Self Actualization

Need to determine what level of the hierarchy theconsumers are at to determine what motivates theirpurchases.

Social Class Characteristics

Upper -Middles

Upper Middles possess neither family statusnor unusual wealth. The primarilyconcerned with career. They have attainedpositions as professionals, independentbusinesspersons, and corporate managers.They believe in education and want theirchildren to develop professional oradministrative skills so that they will notdrop into the lower stratum. They are civic

minded and are a quality market for goodclothes, homes, furniture and appliances.

Middle Class

The middle class is average paid white andblue-collar workers who try to do the properthings. Often they will buy products tokeep up with the trends. The middle classbelieves in spending more money onworth-while experiences for their childrenand aiming them towards professionalcolleges.

Working Class

Working class consists of average pay bluecollar workers and those who lead aworking class life-style, whatever income,school or job they have. The working classdepends heavily on relatives for economicand emotional support, for tips on jobopportunities, advice on purchase, and forassistance in times of trouble. The workingclass maintains a sharp sex-role division andstereotyping. They are found to have largerfamilies than the higher classes.

Upper Lowers

Upper Lowers are working, though theirliving standard is just above the poverty line.They perform unskilled work and are poorlypaid. Often they are educationally deficient.Although they fall near the poverty line, theymanage to maintain some level ofcleanliness.

Lower Lowers

Lower Lowers are visibly poverty-stricken

and usually out of work. Some are notinterested in finding permanent jobs andmost are dependent in charity for income.Their homes and possessions are dirty,ragged, and broken-down.


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Caselet #1 Nutrament

Nutrament, a product marketed by Bristol-Myers Squibboriginally was targeted at consumers that needed to receiveadditional energy from their drinks after exercise etc., a fitnessdrink. It was therefore targeted at consumers whose needswere for either love and Belongingor esteem. The product wasnot selling well, and was almost terminated. Upon extensiveresearch it was determined that the product did sell well ininner-city convenience stores. It was determined that the

consumers for the product were actually drug addicts whocouldnt digest a regular meal. They would purchaseNutrament as a substitute for a meal. Their motivation topurchase was completely different to the motivation that B-MS had originally thought. These consumers were at thePhysiologicallevel of the hierarchy. BM-S therefore had toredesign its marketing mix to better meet the needs of thistarget market.Motives often operate at a subconscious level therefore aredifficult to measure.

Perception

What do you see??Perception is the process of selecting, organizing and interpret-ing information inputs to produce meaning. This means wechose what info we pay attention to, organize it and interpret it.Information inputs are the sensations received through sight,taste, hearing, smell and touch.

Selective Exposure- This means we tend to select inputs to beexposed to our awareness. This is more likely if it is linked toan event, and/or satisfies current needs.

Selective Distortion- This happens when we change or twistcurrent received information, which is inconsistent with our

beliefs.

Selective Retention- In this case we remember only those inputsthat support our beliefs, and forget those that dont.For instance, an average supermarket shopper is exposed to17,000 products in a shopping visit lasting 30 minutes-60% ofpurchases are unplanned and is also exposed to 1,500 advertise-ment per day. Hence they cannot be expected to be aware of allthese inputs, and certainly will not retain many.

Interpreting information is based on what is already familiar, onknowledge that is stored in the memory.

Ability and Knowledge

Learning can be said to be changes in a persons behavior causedby information and experience. Therefore to change consumers

behavior about your product, you need to give them newinformation regarding the product like free sample etc.

When making buying decisions, buyers must process informa-tion. Knowledgeis the familiarity with the product and expertise.Inexperience buyers often use prices as an indicator of qualitymore than those who have knowledge of a product.Non-alcoholic Beer example: consumers chose the mostexpensive six-pack, because they assume that the greater priceindicates greater quality.

Learningis the process through which a relatively permanentchange in behavior results from the consequences of past

behavior.

Attitudes

we can say that attitudes are knowledge and positive andnegative feelings about an object or activity. It maybe tangible orintangible, and living or non- living. Generally it seen thatattitudes drive perceptions

We learn attitudes through experience and interaction with otherpeople. Consumer attitudes toward a firm and its productsgreatly influence the success or failure of the firms marketingstrategy.

For instance, Honda says, You meet the nicest people on aHonda, dispelling the unsavory image of a motorbike rider, inthe late 1950s. Changing market of the 1990s, baby boomersaging, and Hondas market returning to hard core. To changethis they have a new slogan Come ride with us.

Attitudes and attitude change are influenced by consumerspersonality and lifestyle.

Again, we tend to screen information that conflicts with theirattitudes and distort information to make it consistent andselectively retain information that reinforces our attitudes. But,

bear in mind that there is a difference between attitude andintention to buy i.e., ability to buy.

Personality

One way of explaining personality is all those internal traits andbehaviors that make a person unique, keeping in mind the factthat uniqueness arrives from a persons heredity and personalexperience. Examples include:

Workaholism

Compulsiveness

Self confidence

Friendliness Adaptability

Ambitiousness

Dogmatism

Authoritarianism

Introversion

Extroversion

Aggressiveness

Competitiveness.

Traits affect the way people behave. Marketers try to match thestore image to the perceived image of their customers.

Lifestyles

You may have observed that recently trends in lifestyles areshifting towards personal independence and individualism anda preference for a healthy, natural lifestyle.

Lifestyles are the consistent patterns people follow in their lives.

For Example you buy healthy foods to maintain a healthylifestyle.


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Opinion Leaders

Opinion leaders basically play the role of spokesperson etc.Marketers try to attract opinion leaders...they actually use (pay)spokespeople to market their products. Say, for example SachinTendulkar (Pepsi, Visa , Biscuit, Adidas etc.)

Roles and Family Influences

Roles are things you should do based on the expectations ofyou from your position within a group.People have many roles.

Husband, father, employer/ee. Individuals role are continuingto change therefore marketers must continue to updateinformation.

Family is the most basic group a person belongs to. Marketersmust understand:

that many family decisions are made by the family unit

consumer behavior starts in the family unit

family roles and preferences are the model for childrensfuture family (can reject/alter/etc)

family buying decisions are a mixture of family interactionsand individual decision making

family acts an interpreter of social and cultural values forthe individual.

The Family life cycle: families go through stages, each stagecreates different consumer demands:

bachelor stage

newly married, young, no children...me

full nest I, youngest child under 6

full nest II, youngest child 6 or over

full nest III, older married couples with dependantchildren

empty nest I, older married couples with no children living

with them, head in labor force empty nest II, older married couples, no children living at

home, head retired

solitary survivor, in labor force

solitary survivor, retired

Modernized life cycle includes divorced and no children.

Two Income M arriages Are Now the Norm

Because 2 income families are becoming more common, thedecision maker within the family unit is changing...also,family has less time for children, and therefore tends to letthem influence purchase decisions in order to alleviate someof the guilt. Children also have more money to spendthemselves.

Reference Groups

Individual identifies with the group to the extent that he takeson many of the values, attitudes or behaviors of the groupmembers.

Families, friends, sororities, civic and professional organiza-tions.Any group that has a positive or negative influence on apersons attitude and behavior.

Membership groups(belong to)Affinity marketing is focused on the desires of consumers that

belong to reference groups. Marketers get the groups to approvethe product and communicate that approval to its members.Credit Cards etc.!!

Aspiration groups(want to belong to)Disassociate groups(do not want to belong to)Honda, tries to disassociate from the biker group.

The degree to which a reference group will affect a purchase

decision depends on an individuals susceptibility to referencegroup influence and the strength of his/her involvement withthe group.

Social Class

An open group of individuals who have similar social rank. USis not a classless society. US criteria; occupation, education,income, wealth, race, ethnic groups and possessions. Social classdetermines to some extent, the types, quality, quantity ofproducts that a person buys or uses.

Lower class people tend to stay close to home when shopping,do not engage in much prepurchase information gathering.

Stores project definite class images.Family, reference groups and social classes are all social influenceson consumer behavior. All operate within a larger culture.

Culture and Sub-culture

Culture refers to the set of values, ideas, and attitudes that areaccepted by a homogenous group of people and transmitted tothe next generation.

Culture also determines what is acceptable with productadvertising. Culture determines what people wear, eat, resideand travel. Cultural values in India are good health, education,individualism and freedom. In todays culture time scarcity is agrowing problem. So as a result there is a change in meals.

Different society, different levels of needs, different culturalvalues.

Culture can be divided into subcultures:

Geographic regions

Human characteristics such as age and ethnic background.

Culture effects what people buy, how they buy and when theybuy.

Case on Customer Behavior

M odernizing Sales OutletsMr. Harish Panjwani was a refugee when he started his small

grocery business about 40 years back. Initially, he hawked hisgood door to door and soon developed a sizeable number ofsteady customers. This was largely due to his sober tempera-ment, reliable dealings and his amiable nature. His extrovertnature helped him develop many friends and well-wishers.

Over a period of time, Mr Panjwani became a socially promi-nent person with good acquaintances from many walks of life.He expanded the range of his business activities and he nowown several shops dealing in consumer durables, dairy productsand also has a general store besides a large medical shop. Being


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of a conservative frame of mind, he feels emotionally attachedto his original grocery business and continues to operate it withenthusiasm. His business place has even come to be associatedwith a meeting venue for people of his generation to meet.

His children are grown up and the eldest one, Rajesh, has justreturned from abroad after completing his managementeducation there. Ambitious by nature, Rajesh would like toexpand his business fast. He feels that he needs to be profes-sional in his approach. In his option, his fathers way of

dealing with people is outdated. Many a times, he feels irritatedwhen his fathers old friends drop in at the shops and spendtime talking with him. Rajesh feels that this type of casual cometogether is a waste of time. He would prefer to be morebusiness like. He would to deal with them as customers only,serving them with precision and in a methodical manner. Heexpects that his customer should appreciate this modern wayof doing business. He has, however, broached his inner feelingsonly in an indirect way to his father, and he found that thisfather believes in maintaining close personal links with hiscustomers. Some of the customers have, anyhow, startednoticing the change in the way in which Rajesh deals with them.They feel that the old warmth of their relationship with the

senior Panjwani is somehow missing and they are now lesswelcome at the shops.

Questions

1. What do you think is the contribution of personalrelationship in such a business?

2. Do you agree with the approach adopted by Rajesh? Doyou have any suggestion to make?

Taken from the fourth semester examination question paper ofPune University.

Key Terms

Customer needsCustomer focus

Needs and wants

Consumer focused marketing

Customer needs assessment

Primary needs

Stimulus-response model

Black box

Cultural

Social

Personal

Psychological

Sub-cultures

Social Class

Aspiration groups

Disassociate groups

Membership groups

Reference Groups

The Family life cycle

Opinion leaders

Lifestyles

Personality

Attitudes

Learning

Ability and Knowledge

Selective Exposure

Selective Distortion

Selective Retention

Perception

Motives

Decider

Buyer

User

Initiator

Influencer

Points to Ponder

Objectives of One-to-One

Marketing

nTo attain customers

nSell them more products

nMake a profit


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Changes in the Business Environment

n Increasedconsumer power

n Access to

information

n More products and

servicesn Interactive and

instant exchanges

n Access to customerpatterns andpreferences

n Evolution to other -

Web connection

PDAs HDTV

Mobile phones

The behavior that consumers

display in searching for,purchasing, using, evaluating, anddisposing of products and services

that they expect will satisfy theirneeds.

Consumer Behavior

Personal Consumer

The individual who buys goods andservices for his or her own use, for

household use, for the use of afamily member, or for a friend.

Organizational Consumer

A business, government agency, orother institution (profit or nonprofit)

that buys the goods, services,and/or equipment necessary for the

organization to function.


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Development of the Marketing

Concept

Production

Concept

Selling Concept

Product Concept

Marketing

Concept

The Selling Concept

n Assumes that consumers are unlikely to

buy a product unless they areaggressively persuaded to do so

n Marketing objectives:

Sell, sell, sell

n Lack of concern for customer needs andsatisfaction

The Marketing Concept

n Assumes that to be successful, acompany must determine the needs andwants of specific target markets and

deliver the desired satisfactions betterthan the competition

n Marketing objectives:

Profits through customer satisfaction

The Marketing Concept

A consumer-oriented philosophythat suggests that satisfaction ofconsumer needs provides the focusfor product development andmarketing strategy to enable thefirm to meet its own organizationalgoals.


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Implementing the Marketing

Concept

n Consumer Research

n Segmentation

n Targeting

n Positioning

The Marketing Mix

n Product

n Price

n Place

n Promotion

Successful Relationships

Customer

Value

Customer

Satisfaction

Customer

Retention

Societal Marketing Concept

A revision of the traditional marketing conceptthat suggests that marketers adhere to

principles of social responsibility in themarketing of their goods and services; that is,

they must endeavor to satisfy the needs andwants of their target markets in ways thatpreserve and enhance the well-being ofconsumers and society as a whole.


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The Societal Marketing Concept

n All companies prosper when societyprospers.

n Companies, as well as individuals,would be better off if socialresponsibility was an integral

component of every marketing decision.

n Requires all marketers adhere toprinciples of social responsibility.

Characteristics that affect customer behaviour

Notes

21 Lecture 01 Libre

Documents

Transcript of 21 Lecture 01 Libre