Introduction to Consumer Behaviour Introduction

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BBA VI SEM Consumer Behaviour

Introduction to Consumer Behaviour

Introduction:

The reason for a business firm to come into being is the existence of a consumer who

has unfulfilled needs and wants. To fulfil these consumer needs an organization is set

up. In your professional capacity you may also be a part of one such business

organization. But as part of the organization, have you ever wondered about who are

the consumers of your products and services? Why do these consumers buy your

brand and not that of the competitors? How do your consumers perceive your product

fulfils their needs? After having bought your product do they feel satisfied or

dissatisfied? And how are these feelings reflected in their behaviour as consumers?

It is important to the survival and growth of your organization that you regularly raise

such questions and attempt to find answers to them. It is only through such a process

of questioning and seeking that you can be sure of keeping your firm on the growth

path. A thorough knowledge of your consumers and an understanding of their

behaviour (as consumers) are essential if you wish to continue to remain in business.

This and the following units in this book provide you an insight into the subject of

consumer behaviour. After having read this unit you would be able to spell out who

are consumers, why they behave in the manner that they do, what influences their

behaviour and how you as a marketer can manipulate the influencing factors in your

favour. This is the most important aspect of consumer behaviour which has practical

action implications for each business firm. Once having understood the behaviour of

consumers and knowing that their behaviour can be influenced, you can initiate a

number of steps to do so. This unit covers the nature, scope and applications of

consumer behaviour.

The term "consumer" refers to an individual who buys goods and services for personal

use. The consumer makes the decision on whether to purchase a product or not; thus

the consumer is the target of marketing strategies. From an economic perspective,

consumer needs control the demands for goods and services. These needs may include

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unique wants, wishes and desires, as well as emotional attachments towards products

and services. But there is a difference between want and need. Need is the necessity of

a consumer whereas want is the wish or aspiration of consumer which he/she wants to

achieve. For example; Mr. Sharma for his day to day pursuits should have mobile.

That is his need, whereas, if Mr. Sharma wishes to have an APPLE I-pad is his want.

Marketers create demand. Demand is the willingness to buy a particular product or

service. It is caused by a need or motive, but it is not the motive. For example:

advertising has created a demand for mouthwash/deo/ hair styling jel. One way some

advertisement may show that without these things one may have bad breathe or can‟t

be style icon or an attractive personality. And, with bad breathe or outdated

personality people may not like you. This message ties mouthwash/deo/hair styling jel

to the need for affiliation or belongingness. In this way these advertisements and their

marketers directly do not create the need for these products but suggests that using

certain product is essential.

Nature of Consumer Behaviour:

Consumer behaviour can be defined as:

"The decision process and physical activity engaged in when evaluating, acquiring,

using or disposing of goods and services."

This definition raises a few queries in our minds-what or who are consumers? What is

the decision process that they engage in? Answers to these questions help define the

broad nature of consumer behaviour.

Who is Consumer:

A "consumer" is anyone who typically engages in any one or all of the activities

described in our definition. Traditionally consumers have been defined very strictly in

terms of economic goods and services, i.e. goods and services wherein a monetary

transaction is involved. However, over time this concept has been widened to include

goods and services where a monetary exchange is not involved. Thus, the services of

voluntary organizations have also been included in this definition, and users of the

services of these organizations are also viewed as consumers. The logic behind this

approach is that consumers of free service also engage in the same kind of decision

process and physical activity as consumers of economic goods and services. A

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"customer" is one who actually purchases a product or service from a particular

organization or shop. A customer is always defined in terms of a specific product or

company.

However, the term consumer is a far wider term encompassing not only the actual

buyer or customer but also all its users, i.e. consumers. There are two situations when

this distinction between consumers and customers may occur, i) when the service or

product is provided free, and ii) when the customer is not the actual user of the

product or is only one of the many users. The second situation needs greater

elaboration as it is of critical significance for us.

Very often, the actual customer making a purchase may not be doing so for himself or

herself. For instance, in case of a father buying a box of crayons for his four-year old

daughter, the customer is the father but the actual user of consumer is his daughter.

Another case may be where a father is buying a TV for the family members. The

father is the customer but all the family members are the consumers. The two vital

elements to remember in all consumer situations are a) the influence on purchase from

other people and b) the roles taken on by different people in consumer behaviour

situations.

In the instance of the father buying crayons for his daughter, the latter may not have

had influence at all on the purchase; the father is the decision maker and buyer and the

daughter is the user. In case of the father buying a TV for his family, it is quite likely

that the wife and children may have exerted considerable influence on the decision.

The father is simply, the buyer, while other family members may be influencers and

all. including the father, are users.

Table 1, 1 presents one way of classifying the roles that people can take on in the

context of consumers behaviour.

Some Consumer Behaviour Roles

Role Description

Initiator: The person who determines that some need or want is not being met.

Influencer: The person who intentionally/unintentionally influences the decision to

buy the actual purchase and/or use of product or service.

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Buyer: The person who actually makes the purchase.

User: The person who actually uses or consumes the product or service.

Scope of Consumer Behaviour:

When we set out to explain the scope of consumer behaviour we need to refer to all

that which forms part of consumer behaviour.

The scope of consumer behaviour has been briefly touched upon in the previous

section wherein it was explained that how consumer behaviour includes not only the

actual buyer and his act of buying but also the various roles played by different

individuals and the influence they exert on the final purchase decision. In this section

we shall define and explain the scope of study of consumer behaviour.

To define the scope of a subject it is important to set parameters or a framework

within which it shall be studied. Figure 1.1 presents one such framework for studying

consumer behaviour. This framework is made up of three main sections-the decision

process as represented by the inner-most circle, the individual determinants on the

middle Circle and the external environment which is represented by the outer circle.

The study of all these three sections constitutes the scope of consumer behaviour.

Here, we shall dwell on these constituents of the framework only briefly as they are

explained in detail in the following units.

Decision Process:

The decision process as depicted in the Figure 1.1 comprises a series of steps. The

first step is when the consumer becomes aware of the fact that he has a problem. The

problem maybe that he has run out of toothpaste or that he needs new sofa for the

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Figure 1.1: A simplified fr

amework for studying consumer behaviour

drawing room or that he needs to engage the services of an accountant to help him

with his tax planning. Problem recognition thus occurs when the consumer recognizes

that he has an unfulfilled need. The desire to fulfil this need triggers off the other steps

of information; search and evaluation and finally result in the purchase process.

However, not all situations of problem recognition automatically lead to the next step

of information search and evaluation. A consumer may recognize the need for a

vehicle to cover the long distance from his home to office and back. But if he doesn't

have the means to buy a vehicle for himself, then his need would remain a need, and

despite his recognition of the problem, the ensuing steps will not take place. The

constraints can be lack of availability or lack of ability to buy.

Only if there are no constraints preventing further behaviour, the consumer will set out

to search for information relevant to the problem. The information search can take

place without the consumer even being aware of it or it may take the form of a

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deliberate, prolonged search. To replenish the stock of toothpaste, a regular customer

knows from memory and past experience the brand, the package size he wishes to

buy, and the place from where he would like to buy. Of course, if it is a first time

customer for toothpaste then he, would search for information from the external

environment, such as his friends, shopkeepers, and advertisements. Having gathered

the relevant information, the consumer needs to evaluate it to arrive at the decision

regarding which toothpaste best fulfils his need.

Having arrived at the decision, he set'

s out to make the purchase. At this point the

consumer has to make a choice regarding which outlet to by from. After the purchase

when the consumer uses the product he either feels satisfied with-it and concludes that

he has made the right decision or the feels dissatisfied and decides that his decision

was not correct. This dissatisfaction-set in motion a search for alternative choices and

fresh evaluation. It is thus a continuing cycle of decision process.

What is Personality? Personality represents a whole person. Individuals differ from

each other on the basis of personality. Personality refers to the set of traits and

behaviors that characterize an individual. According to Fred Luthans, ―Personality

will mean how people affect others and how they understand and view themselves, as

well as their pattern of inner and outer measurable traits and the person-situation

interaction.‖ Thus, personality refers to the sum total of internal and external traits of

an individual, which are relatively stable and which make the individual different

from others.

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What is Consumer Perception and Perception process?

In a simpler sense, Perception is understood as the act of seeing what is there to be

seen. But what is seen is influenced by the individual, the object, and the situation.

―The study of perception is concerned with identifying the processes through which

we interpret and organize sensory information to produce our conscious experience of

objects and object relationship.‖ Perception has implications in such areas as

employee selection, training, performance evaluation, testing one‟s loyalty to the

organization, and in deciding on appropriate managerial practices based on Theory X

and Theory Y assumptions (Mc Gregor‟s theory of motivation). Perception Process-

Perception process comprises five important stages; receiving, selecting, organizing,

interpreting, and reacting to the stimuli.

Consumer Decision Making Process

The most important environment in which firms operate is their customer

environment because the basic belief of marketing oriented company – that the

customer is the centre around which the business revolves. Therefore, marketing

people need to understand the processes that their customers go through when making

decision. The consumer decision making process involves series of related and

sequential stages of activities. The process begins with the discovery and recognition

of an unsatisfied need or want. It becomes a drive. Consumer begins search for

information. This search gives rise to various alternatives and finally the purchase

decision is made. Then buyer evaluates the post purchase behavior to know the level

of satisfaction. The process is explained below with the help of diagram.

Steps in Decision Making Process

1. Need Recognition

When a person has an unsatisfied need, the buying process begins to satisfy the needs. The

need may be activated by internal or external factors. The intensity of the want will indicate

the speed with which a person will move to fulfill the want. On the basis of need and its

urgency, the order of priority is decided. Marketers should provide required information of

selling points.

2. Information Search

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Identified needs can be satisfied only when desired product is known and also easily

available. Different products are available in the market, but consumer must know which

product or brand gives him maximum satisfaction. And the person has to search out for

relevant information of the product, brand or location. Consumers can use many sources e.g.,

neighbors, friends and family. Marketers also provide relevant information through

advertisements, retailers, dealers, packaging and sales promotion, and window displaying.

Mass media like news papers, radio, and television provide information. Nowadays internet

has become an important and reliable source of information. Marketers are expected to

provide latest, reliable and adequate information.

3. Evaluation of Alternatives

This is a critical stage in the process of buying. Following are important elements in the

process of alternatives evaluation a.

A product is viewed as a bundle of attributes. These attributes or features are used for

evaluating products or brands. For example, in washing machine consumer considers price,

capacity, technology, quality, model and size.

b. Factors like company, brand image, country, and distribution network and after-sales

service also become critical in evaluation.

c. Marketers should understand the importance of these factors with regards to the

consumers while manufacturing and marketing their products.

4. Purchase Decision

Outcome of the evaluation develops likes and dislikes about alternative products or

brands in consumers. This attitude towards the brand influences a decision as to buy

or not to buy. Thus the prospective buyer heads towards final selection. In addition to

all the above factors, situational factors like finance options, dealer terms, falling

prices etc., are also considered.

5. Post- Purchase Behavior

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Post-purchase behavior of consumer is more important as far as marketer is

concerned. Consumer gets brand preference only when that brand lives up to his

expectation. This brand preference naturally repeats sales of marketer. A satisfied

buyer is a silent advertisement. But, if the used brand does not yield desired

satisfaction, negative feeling will occur and that will lead to the formation of negative

attitude towards brand. This phenomenon is called cognitive dissonance. Marketers

try to use this phenomenon to attract users of other brands to their brands. Different

promotional-mix elements can help marketers to retain his customers as well as to

attract new customers

Levels of Consumer Decision Making

The consumer decision making process is complex with varying degree. All purchase

decisions do not require extensive effort. On continuum of effort ranging from very

high to very low, it can be distinguished into three specific levels of consumer

decision making: 1 Extensive Problem Solving (EPS) 2. Limited Problem Solving

(LPS) 3. Routine Problem Solving (RPS)

1. Extensive Problem Solving (EPS): When consumers buy a new or unfamiliar

product it usually involves the need to obtain substantial information and a long time

to choose. They must form the concept Notes 20 of a new product category and

determine the criteria to be used in choosing the product or brand.

2. Limited Problem Solving (LPS): Sometimes consumers are familiar with both

product category and various brands in that category, but they have not fully

established brand preferences. They search for additional information which helps

them to discriminate among various brands.

3. Routine Problem Solving (RPS): When consumers have already purchased a

product or brand, they require little or no information to choose the product.

Consumers involve in habitual and automatic purchases.

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Consumer Behavior and Marketing Strategies

Understanding the consumer behavior is the basis for marketing strategy formulation.

Consumer‘s reaction to strategy determines the organization success or failure. In this

competitive environment organizations can survive only by offering more customer

value - difference between all the benefits derived from a total product and all the

costs of acquiring those benefits - than competitors. Providing superior customer

value requires the organization to do a better job of anticipating and reacting to the

customer needs than the competitor. Marketing strategy is basically the answer to the

question: How will company provide superior customer value to its target market?

The answer to this question requires formulation of marketing - mix – product, price,

place and promotion - strategies. The right combination of these elements meets

customer expectation and provides customer value. For example, marketer of a bike

must know the customers performance expectations, desired service, price willing to

pay, information he seeks and after-sales service to provide superior customer value.

Consumer Behavior and Market Segmentation

The most important marketing decision a firm makes is the selection of one or more

segments to focus their marketing effort. Marketers do not create segments but they

find it in the market place. Market segmentation is the study of market place in order

to discover viable group of consumers who are homogeneous in their approach in

selecting and using goods or services. Since market segment has unique needs, a firm

that develops a product focusing solely on the needs of that segment will be able to

meet the target group desire and provides more customer value than competitor. For

example, right segment for ‗Femina‘ magazine is educated urban women. The success

of this magazine depends on their understanding of the urban woman.

Consumer Behavior and Product Positioning

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Product positioning is placing the product, service, company, or shop in the mind of

consumer or target group. Through positioning marketers seek the right fit between a

product and desired customer benefits. The right positioning means understanding the

consumer perception process in general and perception of company‘s product in

particular. For example, Samsung brand is perceived as premium brand by few

customers and value-driven brand by others in the market, but marketer must find out

what makes their target market to perceive differently and position it accordingly.

Consumer Behavior and Marketing Research

consumer behavior enables marketing researchers to predict how consumers will react

to promotional messages and to understand why they make the purchase decision they

do. Marketers realized that if they know more about the consumer decision making

criteria, they can design marketing strategies and promotional messages that will

influence consumers more effectively. The importance of consumer behavior made

marketers to think of a separate branch in marketing research - Consumer research, to

deal exclusively for consumer related issues. The current focus of consumer research

is on study of underlying needs and motives in taking purchase decisions, consumer

learning process and attitude formation process.

Consumer Behavior and Non-Profit and Societal Marketing

sound knowledge of consumer behavior can help the organizations that sell ideas and

concepts of social relevance. Institutions that promote family planning, AIDS free

society, governmental agencies, religion orders and universities also appeal to the

public for their support in order to satisfy some want or need in society. The

knowledge about potential contributors, what motivate their generosity, how these

motives can be effectively appealed is useful for the organizations involved in these

activities.

Consumer Behavior and Governmental Decision Making

Two major areas where consumer behavior study helps government is in policy

making on various services, and in designing consumer protection legislation. The

knowledge of people‘s attitudes, beliefs, perceptions and habits provides adequate

understanding of consumers

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1.1 Goals.

A goal is an external object to which a motive is directed. Goals differ from drives in

that the goal is external, and pulls the person in a given direction; whereas a drive is

internal and pushes the individual.

In this way a goal acts as an incentive to take a course of action (or refrain as the case

may be). When an individual has a drive which needs to be addressed, there may be a

series of goals which would satisfy the drive.

Thus if bored you might seek something to do to relieve the boredom: you might

decide you need entertainment. This leads to goal choice: play a computer game, ring

a friend, watch a video, channel hop or go shopping in a big department store.

1.2 Risk, uncertainty and heuristics

Surprisingly there is a risk associated with buying products. Some examples are:

Type of risk Explanation Examples

Physical risk The fear of injury from

the product

Buying a car with defective brakes;

buying drugs with unpleasant side

effects.

Financial risk Losing or wasting money Buying a car that depreciates

quickly; buying a computer and

finding the price falls to half within

three months.

Functional risk Finding out the product

will not do the job you

bought it for

Buying a car that breaks down

constantly; buying a painkiller that

does not stop the pain; buying a

computer and having to replace the

falty hard drive every two months.

Pschosocial risk The fear of looking foolish Buying a suit that friends tnink

looks weird on you; buying a

Robin Reliant.

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To deal with these risks people learn heuristics. These are simple rules that seem to

work most of the time. Heuristics are subject to alteration in the light of new

knowledge.

Heuristics can be used by the consumer to simplify decision making. They may be

stored in the consumers memory, or may be constructed on the spot based on the

information received, but either way they allow the consumer to reach rapid decisions

without overstretching his or her cognitive capacity.

Use of heuristics in the extreme leads to habitual behaviour. For example I go to the

same restaurant on the same night with the same bloke to eat the same meal and have

a natter. I cannot be bothered with scanning a huge menu and have to go through all

that decision making - I am usually too tired and simply want to enjoy the company.

Some customers may have less rigid heuristics but they may still be a barrier to

purchasing. A customer has the price of £1000 as the most he or she will pay for a

computer. This may be so strong that a good value for money machine at £1,200 will

be spurned in order to buty one which is only half as good for £800.

1.3 Life as theatre

People create and project images of themselves to other people; these images are

called roles. The role may change according to the circumstances and environment

which the individual is in. Role playing behaviour is natural, and not consciously

carried out. It is true that people may unconsciously change their accents, movements

and statements to fit in with the people around them. Indeed behavour in groups if

acceptable often results in the conferment of status.

Erving Goffman developed a useful analogy for the role playing behaviour when he

developed his idea, or analogy, of life-as-theatre. This is illustrated by the table

below.

Theatrical

terms

Explanation Real-life example

Props Items used to make gestures, or Cigarettes, walking-sticks,

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to support and emphasis

movement, or to set a scene.

furniture and ornaments.

Costume Items of clothing which serve to

establish a role, or set a scene

Sportswear, business suits,

power dressing

Stage The place where the

performance is held, and where

the audience is assembled.

Offices, living rooms, pubs,

churches.

Backstage The place where the dressing

rooms are; where the actors

prepare for their performance,

and where they meet their

friends and intimates.

Where the individual lives or

is relaxed; home; where the

persons friends and intimates

can visit.

Make-up The face the actor puts on to

emphasise the characterisation.

Cosmetics, perfumes,

aftershave, hairdressing.

Script A pre-planned set of statements

intended to communicate the

role to the audience.

Jokes, sayings, conversational

styles, professional jargon.

Business The movements actors make in

the course of playing the role.

Gestures, body language, facial

expressions used to convey

emotions and ideas.

Applause Feedback from the audience;

confirmation that the role

projection has been effective.

Getting your way in business

negotiation, having friends

laugh at your jokes, having a

conversational response from a

friend.

However, Goffman goes to great lengths to emphasise that the role-playing is actually

part of the real everyday lives of real people, not the contrived parts played by actors.

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1.4 Personality

Personality is the collection of individual characteristics that make a person unique,

and which control an individual‘s responses to and relationship with the external

environment. It is a composite of subordinate processes: e.g. attitude, motivation,

perception. It is the whole of the person and is the system that governs the behaviour

rather than the behaviour itself.

The elements that make up the behaviour are called traits. Considerable effort has

gone into identifying traits and relating them to consumer buying behaviour. The

totality of the traits (i.e. the personality ) dictates buying behaviour rather than any one

trait.

Personality has the following features:

It is integrated: that is to say, all the factors making up the personality act

on each other to produce an integrated whole.

It is self-serving. The characteristics of personality facilitate the attainment

of needs and goals. In other words, the personality exists to meet its own

needs.

Personal characteristics are individualistic and unique, in degree and

intensity as well as presence. The number of traits is large and the

combinations of traits are huge, thus making each person unique.

Personality is overt. External behaviour is affected by personality. In

other words by observing a persons behaviour, the personality can be

deduced, albeit indirectly.

Personality is consistent. Once a person‘s basic personality has been

established, it will change only slowly and with some difficulty. Thus we

can assume an individuals personality will remain constant throughout the

buying process.

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Because people are individuals it is difficult for marketers to take a standardised

approach. For this reason attempts have been made to identify groupings of

personality types which can be approached with a standardised offering.

1.5 Approaches to the study of personality

There are four basic approaches to the study of personality:

1. Pschoanalytic The psychoanalytic approach emphasises psychanalysis. The focus

is individual. This approach is typified by Freudianism.

2. Typology Here individuals are grouped according recognised types.

3. Trait & factor theories. Here the individual traits of the personality are examined

as factors making up the whole.

4. Psychographics The consumers are measured using their behavioural tendencies in

order to infer personality traits.

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1.6 Concepts of self

Self-concept is the person‘s ideas and feelings about him or herself. It has an

important role to play in understanding consumer behaviour, since people buy

products which contribute to the self-concept.

‗Of all the personality concepts which have been applied to

marketing, self-concept has probably provided the most

consistent results and the greatest promise of application to

the needs of business firms‘ (Gordon Foxall.)

An example: a woman thinks she is a femme fatal - as a consequence she chooses chic

clothes to enhance her image. Another example: a student thinks he is a looser - as a

consequence he or she rarely washes his tea shirts, wears old scruffy jeans and rarely

buys anti-perspirants.

Thus in projecting an image a person can become a super-work of art exploiting all

five senses: sight (by dressing well), hearing (by using voice well), smell (by wearing

scent), touch (by looking after the skin, by wearing clothes that feel good -

cashmere?) and even taste (flavoured lipsticks, mouth washes).The extent to which

people will want to make a good impression depends on the following factors:

the degree of importance attached to impressing the other person

the degree to which the individual anticipates that the target audience can be

impressed

the cost in time and money in creating the desired image.

Self-concept is a learned construct. Children tend to look for role models to imitate.

Children can be crushed by a denial of the role being projected: if people laugh while

you are experimenting with the ‗cool dude‘ role your favourite uncle adopts it is

difficult to recover and try that role again.

The self-concept has four attributes:

1. it is learned, not innate.

2. It is stable and consistent. Self-perception may change, self-concept does not.

This accounts for brand loyalty, since self-concept involves a view of which

products ‗fit the image‘.

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3. It is purposeful. There is a reason and a purpose behind it. It is there to enhance a

paerson‘s ego. It is therefore advisable to not attack a person‘s beliefs directly.

People get angry or at least defensive when this happens.

4. The self concept is unique to the individual, and promotes individualism.

1.7 Attitudes

Attitude can be defined as ‗a learned tendency to respond to an object in a consistently

favourable or unfavourable way‘. Whwether a product will be bought or not depends

to a large extent on a on the consumer‘s attitude towards it. Marketing effort may

have to go into breaking down customers attitudes to product offerings. An example:

an anti-racist policy is introduced in a country yet there is an attitude against it. The

attitude must be changed, slowly and carefully, until people wonder what the problem

was.

An attitude is

learned, not instinctive

not behaviour; rather it is a predisposition towards a particuler behaviour

implies a relationship between a person and an object

fairly stable

either positive or negative - you are either for something (direction) with a certain

amount of feeling (intensity).

Attitudes are not observable - they are predispositions. They are formed through

the result of ecxperience. For example: I have an attitude problem about the

refectory at Uxbridge. I find it too loud and moronic. The music is a pain.

However, I make myself go there to get a drink or a sandwich. I compare it

unfavourably to the relative peace of the refectory at Osterley. But I realise some

students must think it is marvellous.

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1.8 Culture

Culture is a set of beliefs and values that are shared by most people within a group.

The groupings are usually relatively large. Culture is passed from one group member

to another group member, and is usually passed down from one generation to another.

Culture is learned, subjective and arbitrary. Culture can be understood by looking at

food and language.

For example in France cheese is regarded as a delicacy whereas in Japan it is regarded

as rotted milk. Also the French regard snails as a delicacy whereas in Britain it would

be regarded as an offensive meal to offer a guest.

Even when languages are shared there will be differences across a culture. Thus when

an American, speaking in English, talks about wearing pants he is actually taking

about trousers. This creates huge problems for an Englishman shopping for pants in

New York.

Most cultures are ethnocentric. They believe their culture is the best culture.

Hofstede [Culture‘s consequences: International differences in Work-Related Values

(sage, 1984)] carried out a a transnational survey in 66 countries with over 6,000

respondents. He found there were four dimensions to the national characteristics.

1. Individualism versus collectivism. In the USA there is strong individualism. The

frontier mentality has taken a hold. Freedom of speech for the individual is

enshrined in the first ammendment. In Holland there are strong individualistic

tendencies - it is a land that tolerates a wide range of sexual orientations. It is on

the increase in the UK particularly with the Generation X (born between mid

1960s to early 1980s). In Japan and Taiwan there is a strong collectivist culture in

which service is appreciated..

2. Uncertainty avoidance. This is the extent to which a culture will keep rigidly to the

rules and customs in order to reduce uncertainty. A high level of uncertainty

avoidance is a culture where tradition prevails and new ideas are not welcome.

3. Power distance. This refers to the extent to which the culture favours the

centralisation of power.

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4. Masculinity-femininity. This is the extent to which the culture exhibits traditional

male characteristics of asseriveness, achievement and wealth acquisition over the

traditional feminine attributes of nurturing, concern for the environmentt and

concern for the poor. By this definition America is an example a ‗masculine‘

culture.

1.9 Family life cycle and gender roles

The family is a most powerful influence for decision making and purchasing. Reasons

are:

For children the parental influence is the earliest and so colours their perception of

all that follows. Indeed, the super ego can be thought of as an internalised parent.

Parents desire to do the best they can for their children influences the decisions

they make about family purchases. Thus the purchase disposable nappies is an

example of 'comfort for the child'.

Siblings influence each other by the examples they set: the older sibling cares for

and looks after the younger sibling. There are also wider family influences -

particularly in extended families.

From a marketing viewpoint, the level of demand for many products is dictated more

by the number of households than by the number of families. The relevance of

families to marketing is therefore much more about consumer behaviour than about

consumer demand levels.

As a reference group the family is charcterised by these functional characteristics:

a) Face to face contact

Family members see each other every day and interact as advisers, information

providers and sometimes deciders. Other reference groups rarely have this level of

contact.

b) Shared consumption

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Durables such as fridges and furniture are shared, and despite a strong trend away

from eating together, in the case of food there is collective purchasing. Children even

participate in decision making for some major purchase items such as cars and

holidays.

c) Subordination of individual needs

Because consumption is shared, some family members will finf the chosen solution

does not fully meet their needs. This effect of dissatisfaction is quite pronounced in

families.

d) Purchasing agent

Because of the shared consumption there will be one family member who does most

of the shopping. Traditionally this is the mother, but increasing there has been the

energence of shopping roles. Teenage children will be given the job of buying staple

items on a routine fortnightly basis. Father may deal with Insurance and Mortgage

matters. This is because the traditional mother role is changing so more must be done

by the other parties. This has implications for marketers. The target for certain

marketing communications has changed so the advertising placements must change

too.

The family has its own life cycle as shown in the table below:

Stage of life cycle Explanation

Single stage Single people have low earnings, but also have low outgoings

so have a high discretionary income. Tend to be more fashion

and recreation oriented spending money on music, clothes,

holidays and eating out.

Newly married

couples

Without children they are often dual-income families and

threfore 'well off'.

Full nest 1 When the first child arrives one parent normally stops working,

so income drops dramatically. The baby creates new needs:

baby furnishings, baby food, toys. Savings decline and families

are unhappy with their financial position.

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Full nest 2 The youngest child is now over six. Both parents will work

outside the home, perhaps with some career progression. Some

recovery in parental income. Consumption patterns still

affected by children: bikes, piano lessons.

Full nest 3 The youngest child is over eleven. Children have some money

e.g. paper round, work in a shop on Saturday.Family purchase

may be a new car or replacement furniture. Luxury item:

childrens private education.

Empty nest 1 Children have grown up and left home. Couples are at the

height of their careers and earning powers. Low mortgage,

luxury holidays.

Empty nest 2 Main breadwinner has retired so a drop in income. Expenditure

more health oriented. Smaller house and apartment in Spain

syndrome. Chase the sun.

Solitary survivor If still in the workforce widows and widowers enjoy a good

income. May spend more on holidays.

Retired solitary

survivor

Reduced income and consumption. Has special needs for love,

affection and security. May join clubs.

Gender Roles

There are more women in the population due to greater life expectancy and greater

child mortality among boys. Women's roles have changed greatly in the lastthirty

years or so. Women make most purchasing decisions, earn one third of the family

income and make most decisions regarding the home and children. Major decisions

are likely to be made jointly, with men participating in discussions concerning

expenditure. Many males now shop for food. Fifty years ago this would have been a

rarity.

The change in in gender roles comes from the following:

Technology means that most jobs do not require physical strength, so more careers

are open to women.

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Mass contraception has freed women from excessive childbearing.

A more oredered society has lead to greater physical security; there is less need for

the male defence role.

More widespread education means that women are not satisfied to stay at home

and do housework.

Marketers must shift their communications to address this changed situation. Thus

the Oxo family advertisement campaign is now no more. A decision was made not to

aim at the family meal table market, since people rarely eat together these days.

(Personally, I think this is a great shame, and is probably due to laziness. A shared

mealtime is a great time to talk and catch up with each other in a family.) Also the

power between roles is reflected in the Nissan series of ads in which a woman

punishes a man for borrowing her car: 'Ask before you borrow it.'

Eventually one might expect gender roles will not be an issue in advertising at all, but

since advertising in part reflects society, this may be some way off. The recent

revelations concerning Sheryl and Paul Gascoigne reveal how far simple gentlemany

behaviour has still to go to reach an acceptable level before the sexes treat each other

with mutual respect.

1.10 Newproducts: the diffusion and adoption of innovation.

Products are constantly being superseded by newer, more effectiveproducts. For this

reason, firms seek to develop new products. Firms that do not innovate will ,

eventually, be only producing products that are obsolescent.

The product life cycle can be explained in terms of consumer behaviour.

I n t r o d u c t i o nG r o w t h M a t u r i t y D e c l i n e D e a th

SALES

TIME

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In the introduction and growth stages, the more innovative consumers are adopting the

product. In the maturity phase the more cautious are adopting the product, until finally

another product comes along which has more benefits or which does a better job, and

the consumers switch to the new product. The problem for marketers is knowing how

long the maturity phase will last; This makes it difficult to use the product life cycle as

a predictor of of product obsolescence It does tell us all products will fade away, and

marketers sholud therefore develop new products to repce the old ones as they fall out

of favour with the customer.

The ideal outcome is for the producer to develop products which are

culturally anchored — that become part of modern life. Recent examples are the

microwave, the video recorder and the personal computer. None of these would have

been in the typical house of twenty years ago. Such breakthroughs are hard to

achieve. Understandably firms have shown great interest in the processes of

innovation, diffusion and adoption.

Adoption

Everett M Rogers postulated that products would be adopted if they possessed most of

the attributes in the table below:

Attribute Explanation Examples

Relative

advantage

The product must have

some advantage over the

products already on the

market. It must offer the

consumer a better range

of benefits than the

existing solution.

Before the Sony Walkman was

launched, the only way to to listen to

stereo-quality music was to carry a

'ghetto blaster' on your shoulder. The

Walman replaced this cumbersome and

anti-social device within a few years.

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Compatibility The product must fit in

with the consumers

lifestyle.

At one time the Welsh valleys had the

highest rate of VCR ownership in the

world. This was due to the high

unemployment and lack of

entertainment facilities in the area,

making a video recorder a very

convenient way of providing

entertainment.

Complexity The product must not be

too complex for the

consumer to understand.

Apple Mac scored a great success with

user-frienly software with amusing and

entertaining add-ons. The company

made seriouss inroads into IBM's

market, despite being a smaller

company

Trialability Products which can be

tried out are more likely

to succeed.

When Daewoo cars were launched in

Britain, several thousand customers wee

invited to test drive the car. Those who

took up the offer were given free videos

as an inducement.

Observability The more observable the

product, the quicker the

diffusion process. If

other potential

consumers are able to

see the product in use,

this is bound to raise

interes in it.

Part of the reason for the Walkman's

worldwide success is that it can clearly

be observed in use. Likewise, new

fashion ideas seem to catch on very

quickly. This is due to the high level of

observability.

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1.11 Segmentation

Segmentation is concerned with grouping customers who have similar needs and

producing a product ior service that will meet those needs at a profit. It recognises

that no single product will appeal to all customers, consequently it attempts to identify

products that will suit a single segment.

Before the advent of mass marketing, there was demand for simple basic products.

This meant manufacturers could use long production runs to keep costs down. In

these circumstances undifferentiated marketing was used. It worked well because a

standard product with little choice is better than no product at all. Mass production

has great economies of scale over hand production. A classic example is is clothing.

Prior to the industrial revolution most cloth was woven at home, made at home and

people would have one or two changes of clothing. Exceptionally a suit might be

custom made by a tailor. With the advent of the steam engine and steam-powered

looms clothing could be mass produced, sold relatively cheaply and provide customers

with a relatively greater range of choices of style.

This production orientation success was guaranteed by keeping production costs (and

hence prices) low. This approach works well where there is relatively little

competition - such as in certain third world countries. But since the depression of the

1930s the world has slowly changed as most countries have industrialised. There is

now competition around the world. The majority of clothes sold in the UK now are

actually made abroad where production costs are lower. Even Marks & Spencer has

given up on its 'Buy British' policy.

Once people have their core benefits, the market must be segmented to find out how

many people have further needs which may be met by new products and services.

Consider the changes in transportation.

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Product type Core benefits Other benefits and drawbacks

Horse &

carriage

Basic transportation

for owner,

passengers and

goods

Easy to maintain, but unreliable. Slow, not

suitable for long distance travel. Expensive.

Only the most prosperous people can buy

one.

Model T Ford Basic transportation

for owner,

passengers and

goods

Faster, more reliable, expensive. Standard

engine. Standard seating. Standard colour.

As a consequence servicing is cheap.

Modern Ford

vehicle range

Basic transportation

for owner,

passengers and

goods

Reliable, cheap to buy and run, easy to

maintain, fast and suitable for long distance

travel. Available in several different styles,

colours and and engine attributes. Coupled

with this is a wide range of financial

services to facilitate purchase. Optional

extras exist e.g. air conditioning.

Segments are the result of changes in producer/consumer behaviour.

Producers have realised they should produce cars as desirable as possible rather than

as cheaply as possible.

In turn, consumers behaviour is changing. Consumers are usually prepared to pay a

premium price for a product that fits their needs more closely.

By tailoring products more nearly to customers needs, manfacturers are able to charge

a little more. In this way they are able to offset thye extra costs of producing non-

standardised products, and increasing profits as well.

Segmentation.

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Segmentation is an essential precursor to most marketing activities. Identifying a

target group and knowing their needs allows us to position the product correctly in the

target group's minds, and to adopt appropriate promotional strategy, by designing ads

that appeal to the particular group.

The aim of segmentation is to form a mental picture of the organisation's ideal

customer, and to plan everything around that customer. An important step here is to

assess the size of the segment so as to form an opinion whether it is worthwhile

producing a specialist product for those people.

Segments vary ibn size according to the folllowing criteria:

Narrowness of definition of need

There may be a a segment who prefer the colour blue, but this can subdivide into light

blue, metallic blue, navy blue, etc. The narrowere the definition the smaller the

segment.

Complexity of the product in terms of features available.

The more features a product has, the more segments it will appeal to and threfore the

smaller the individual segments.

Consumer involvement with the product category

If the product category attracts high-involvement consumers, the segments are likely

to be small and loyal.

With the rise of flexible manufacturing systems it is possible to consider a production

run of size one. Cars can be custom made quite cheaply. Computers can be custom

made too. Dell computers lead the way with their online 'order-and-build' systems.

This guarantees every product pleases everybody — a win-win situation.

Segmentation increases profitability when the value to the consumer of the

improvements is greater than the cost to the manufacturer of providing them.

Markets may be segmented in various ways, great skill is required in assessing which

method is most appropriate. The ways are:

demographically - according to income, age, family size, occupation etc.

psychographically according to behaviour patterns, attitudes, expectations

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geographically - according to where people live - insurance premiums can reflect the

likelihood of risk in certain areas e.g. a house near the sea might be

more liable to wear and tear and therefore more expensive to insure

behaviourally - according to patterns of behaviour e.g. do the customers have four

holidays a year if so they might be more intereseted in all year

travel insurance; are the customers in a segment all vegans? if so

they might like to have the special vegan catalogue from Harrods.

Cultural and Consumer Behavior

CULTURE - Meaning

For the purpose of studying consumer behavior, culture can be defined as the sum

total of learned beliefs, values and customs that serve to guide and direct the consumer

behavior of all members of that society. Howard and Sheth have defined culture as ―A

selective, manmade way of responding to experience, a set of behavioral pattern‖.

Thus, culture consists of traditional ideas and in particular the values, which are

attached to these ideas. It includes knowledge, belief, art, morale, law, customs and all

other habits acquired by man as a member of society. An accepted concept about

culture is that includes a set of learned beliefs, values, attitudes, habits and forms of

behavior that are shared by a society and are transmitted from generation to generation

within that society.

Culture is learned through the following three ways:

1. Formal learning: Parents and elders teach children the proper way to behave.

For instance, you have been taught that you need to study to be successful and

happy in life. This learning may influence your response both as a student and

individual towards education.

2. Informal learning: We learn by imitating the behavior of our parents, friends,

or by watching TV and film actors in action

3. Technical learning: Instructions are given about the specific method by which

certain things to done such as painting, dancing, singing etc.

Characteristics of Culture

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Culture is learned

Culture regulates society–norms, standards of behavior, rewards and

punishments.

Culture makes life more efficient

All members follow same norms.

Culture is adaptive.

Culture is environmental.

Multiple cultures are nested hierarchically

Types of Culture:

1. National culture

The culture prevalent in a nation, common to everyone

2. Popular culture

The culture of the masses with norms of mass appeal

3. Subculture

The culture of a group within the larger society

Group identification based on nationality of origin, race, region, age,

religion, gender, etc.

4. Corporate culture

The company‘s values, rituals, customs, myths and heroes

Cultural Influences

Culture is that complex whole which includes knowledge, belief, art, law,

morals, customs and any other capabilities and habits acquired by humans as

members of society. Culture influences the pattern of living, of consumption,

of decision-making by individuals. Culture is acquired and it can be acquired

from the family, from the region or from all that has been around us while we

were growing up and learning the ways of the world. Culture forms a boundary

within which an individual thinks and acts. When one thinks and acts beyond

these boundaries, he is adopting a cross-cultural behavior and there are cross-

cultural influences as well. The nature of cultural influences is such that we are

seldom aware of them. One feels, behaves, and thinks like the other members

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of the same culture. It is all pervasive and is present everywhere. Material

culture influences technology and how it brings cultural changes like use of

telephones, mobile phones, clothing styles and fashions, gives the marketers a

chance to improve the product, packing, etc. to meet the needs of the

customers.

Coca Cola is sold all over the world. Procter & Gamble and other companies

give cross-cultural training to their employees. By making cross-cultural

mistakes, many companies have difficulty in pushing their products for

example, (i) Coca Cola had to withdraw its 2 liters‘ bottle from Spain, because

it did not fit in the local refrigerator; (ii) Many countries are very traditional

and do not like women displayed on the products. This acts as a detriment to

business in those countries.

Cultural and Consumer Behaviour:

Culture can be divided into subcultures. A subculture is an identifiable

distinct, cultural group, which, while following the dominant cultural values of

the overall society also has its own belief, values and customs that set them

apart from other members of the same society. Sub-culture categories are:

Nationality: Indian, Sri Lanka, Pakistan

Religion: Hinduism, Islam

Race: Asian, black, white

Age: young, middle aged, elderly

Sex: Male, Female Occupation: Farmer, teacher, business

Social class: upper, middle, lower

Geographic regions: South India, North-eastern India

Cross Cultural Consumer Behavior

Cross cultural marketing: Objectives and Policies Cross-cultural marketing is

defined as ―the effort to determine to what extent the consumers of two or

more nations are similar or different. This will facilitate marketers to

understand the psychological, social and cultural aspects of foreign consumers

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they wish to target, so as to design effective marketing strategies for each of

the specific national markets involved.‖

Problems in Cross Cultural marketing

1. Problems related to product selection: The marketer going for cross cultural

marketing has to select the customers/ market not on the basis of the

superficial similarities of age or income, but by using the real motivating

factors that prompt them to accept or reject products.

2. Problems related to promotion/marketing communication: e.g. Ariel in the

middle east and also Pepsi

3. Problems related to pricing: the marketer has to adjust his pricing policies

according to the local economic conditions and customs.

4. Problems related to selection of distribution channels: in Japan, P & G used

this to sell soap Cross-Cultural Consumer Analysis

To determine whether and how to enter a foreign market, we need to conduct

some form of cross-cultural consumer analysis. Cross-cultural consumer

analysis can be defined as the effort to determine to what extent the consumers

of two or more nations are similar or different. Such analysis can provide

marketers with an understanding of the psychological, social, and cultural

characteristics of the foreign consumers they wish to target, so that they can

design effective marketing strategies for the specific national markets

involved.

Elements and Dynamics of Perception

Schiffman and Kanuk have defined perception as ―the process by which an

individual selects, organises and interprets stimuli into a meaningful and

coherent picture of the world.‖ A stimulus is any unit of input to a sensory

receptor. In a marketing context, the stimuli include brand names,

advertisements, colours, sounds and packages etc.

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Attitudes and consumer Behaviour:

James H Myers and William H. Reynolds, "Attitudes directly affect purchase

decisions and these in turn directly affect attitudes through experience in using

the product or service. In a broad sense, purchase decisions are based solely

upon attitudes existing at the time of purchase, however these attitudes might

have been formed."

Characteristics of Attitude

1. Difficult to measure: Attitudes are reflected in behavior of individuals. Is

can be vaguely termed as how an individual responds to a particular situation.

An individual varies in his behavior and reacts differently in different

situations. Attitudes may vary according to situations and mood of an

individual. Example: Consider an advertisement of Fevicol. If an individual is

good mood he might behave differently on seeing that ad. He might laugh or

smile. But if he is not in a good mood, the ad might add to his bad mood and

he might shout at others laughing at that ad. Since, attitudes vary according to

situations, they are difficult to measure.

2. May create inflexibility and stereotypes: As discussed above, individuals

who behave particular manner under a specific situation can be stereotyped to

that particular behavior. People might expect the same attitude every time in

all the situations. Since, individuals are judged by their first impression,

attitude during the first meeting might be taken as permanent. Example:

Suppose you went to see an action movie with your friend once. He might

assume that you like only action movies.

3. Formed largely from continuous process of socialization: Attitudes are not

formed in one day or so. It is formed gradually, as we interact with more and

people or may times with people in our society. Society consists of different

kinds of individuals so we tend to form varied attitudes. As we meet the same

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person again an again we tend to form an attitude which might be specific to

him only.

4. It is positive attitude: This has been discussed more off lately. People have

varied attitudes. Some people have a optimistic view towards a particular

situation and others might have a pessimist view. It varies from person to

person. Attitudes, positive or negative are developed by post purchase

evaluations. If a consumer is completely satisfied form the product, he will

develop a positive attitude towards that brand and vice versa.

5. Once formed not easy to change: When a person develops a certain attitude

towards a brand or a person, it is very hard to change. If an individual is not

satisfied by product of a particular brand, he will develop a negative attitude

towards that brand and he might not use that brand forever. Attitudes may be

affected by age, position or education of an individual. As a person matures,

his attitude towards a particular brand or person can change.

Functions of Attitude

Understanding functions of attitudes helps in learning how they serve

consumers. According to Daniel Katz, attitudes perform four important

functions for individuals:

1. Utilitarian function

2. Value-expressive function

3. Ego-defensive function

4. Knowledge function

Utilitarian Function

This attitude function serves consumers in achieving desired benefits. We hold

certain brand attitudes partly because of a brand‘s utility. If a product has been

useful in the past, our attitude towards it is likely to be favourable. For

example, a consumer who considers quick relief as the most important criteria

in selecting an anti-cold remedy will be directed to the brand that offers this

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benefit. On the other hand, attitudes will discourage the consumer away from

brands that are unlikely to fulfil the ―quick relief‖ criteria. The Coldarin (an

anti-cold remedy) commercial reflects the utilitarian function of attitudes when

it ensures quick relief.

Value-expressive Function

Attitudes reflect the consumer‘s self-image, values and outlook, particularly

in a high-involvement product. If a consumer segment holds positive attitudes

toward being ―in fashion,‖ then their attitudes are likely to be reflected in this

viewpoint. For example, the self-image of a young man buying a motorcycle

may be of a macho, domineering person who likes to gain an upper hand.

Aggressiveness may reflect itself in purchasing a Royal Enfield Bullet 500 cc

or a Bajaj Pulsar 180 cc. Advertisers often appeal to the value-expressive

nature of attitudes by implying that purchase or use of a certain product will

lead to desired achievement, self- enhancement, or independence.

Ego-defensive Function

Attitudes formed to protect the ego, or self-image, from anxieties and threats

help fulfil this function. Ads for many personal care products such as

mouthwashes, toothpastes, deodorants, anti-pimple creams and cosmetics, etc.

serve as a good example. Advertising capitalises on the fear of social

embarrassment and rejection and greater social acceptance through use of

certain products. This encourages consumers in developing a positive attitude

towards brands associated with social acceptance, confidence, appreciation, or

being attractive and desirable to the opposite sex.

Knowledge Function

Individuals generally have a strong need for knowledge and seek consistency,

stability and understanding. To fulfil this need attitudes help organise the

considerable amount of information to which they are exposed every day. They

ignore irrelevant information and store what is meaningful to them. The

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knowledge function also reduces uncertainty and confusion. Advertising is a

means of acquiring information about products and services. Comparative

advertising attempts to change consumers‘ attitudes towards the advertised

brand by emphasising its advantages over the competing brand.

Introduction to Consumer Behaviour Introduction

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