Nature scope and importance of consumer behavior Consumer Behavior Meaning :Consumer behavior is defined as “The dynamic interaction of affect and cognition behavior by which human beings conduct the exchange aspects of their lives . This means that the buying actions of consumers are greatly affected by their thought process and their feelings experienced . Importance of consumer behavior : • Ever increasing intensity of competition • More aggressive competitors emerging with greater frequency • Changing bases of competition • Geographic sources of competition are becoming wider • Niche attacks are becoming frequent Pace of innovation is rapid • Price competition becoming more aggressive • Product differentiation is declining Characteristics of consumer behavior : 1. Consumer behavior is dynamic: 2. Consumer behavior involves interactions 3. Consumer behavior involves exchange Consumer Research Definition & meaning : consumer research is the systematic collection and analysis of consumer information for the purpose of important decision making in marketing Consumer research plays an important role in marketing process helops in ? Consumer measurement ? Market potential ? Sales forecast Each slement like product mix distribution mix price effectieness of an advetisenmentcampaign consumer acceptance of a product in the fiercely competitive situation ? It is extremely critical for an organization ot monitor the customer satisfaction on a regular basis Why consumer research is needed Consumer research is primarily used for two applications ? Routine problem analysis ie product potential sales forecasting etc ? Non routine problem analysis ie new product launch analysis new product launch success of promotional schemes Relevance of consumer research Today’s business decisions are extremely complex and a large number of variables are involved ? Globalization and liberalization has intensified completion and survival of an organization is at stake ? Optimization at all levels to reduce costs . AN organization needs to know the areas which offer cost reduction without affecting the consumer expectations ? Employees and share holders are becoming increasingly aware of their rights to participate in decision making process ? The tools used for research have increased and organizations are increasingly practicing data mining . [pic]
Need of consumer research :Marketers are often interested in knowing the feedback of consumers and the study of consumer research is extremely important for the formulation of marketing strategies . a marketer would be interested in knowing the answer to the answers to the following questions ? How do consumers interpret information about marketing stimuli such as products stores and advertising ? How do consumers choose form among alternative product classes products and brands? ? How do consumers form evaluation of products and brands ? How do consumers interpret the benefits of marketing offerings ?
How do behavior and environment affect consumer beliefs and attitudes ? Why are consumers more interested or involved in some products or brands than others? ? ‘how do marketing strategies influence consumer’s beliefs and attitude ? Answer to such questions can be obtained only through consumer feedbacks. Approaches to consumer research :The three important approaches to consumer research they are as under 1. Observation survey: IT is a method of collecting past and current data by recording observation . The advantage is it can be used to collect the data even when the respondents are hostile or unable ot give information .
The disadvantage is that it is slow and expensive process and needs the researchers to interpretation skills . 2. survey research : It is communication approach which involves questioning respondents and recording their responses 3. in-depth interviewing It involves a detail probing of the respondent by a specialist interviewer . It has an informal approach where appropriate questions are developed during the course of the interview Types of data 1. Primary data : data collected at first hand either by the researcher or by someone else especially for the purpose of the study are known as primary data 2. econdary Data : Data which have been collected earlier for some other purpose are secondary data in the hands of the marketing researcher Why consumer research sometimes fails to achieve desired results : 1. sometimes consumer research tends to be fragmentary in it’s approach as a result of which it becomes difficult to have an overall perspective in which a marketing problems to be viewed and studied 2. consumer research is sometimes criticized on the ground that it becomes too superficial and faulty 3. it the problem of consumer research is not carefully designed 4. f the researches are less competent not well trained and lack creativity 5. If sufficient time and finance is not provided then the objectives will not be achieved 6. sometime there exists a lack of coordination and understanding between researchers and marketing managers Social class life style and culture : Social Stratification is the division of members of the society into a hierarchy of distinct status classes ,so that the members of each class has relatively the same status and members of all other classes have either more or less.
A specific social class is usually defined by the amount of status that members of a specific class possess in relation to members of other classes Each class has its own lifestyle and consumer behavior pattern Prestige or value attached to the holder of a position is referred to as status and appropriate for example the role of doctor or nurses both these roles are very important from the pont of public healt but it goes without sayng that the former role is valued much . Factors responsible for social stratification
Authority : A person may have authority by virue of holding an authoritative position in various organization or on account of owning land and property Income: The lifestyle fashion views and consumption pattern of a person with high income will convey a message of sophistication and sometimes of insignia . Such people are looked upon highly by the society Occupation and achievement : Mostly an individual is born into the class . That is he automatically becomes a member of the class to which his parents belong However there are possibilities for social mobility through sheer hard work and determination
Education : It is another important parameter for measuring the value and status of an individual in a society . a professionally qualified person is accorded a higher status as compared to an ordinary graduate Civil service officers charted accounts lawyers etc Characteristic features of a social class : Be it a developed economy or a developing economy like India the society has certain characteristics which will distinguish it from other societies
Persons within a given social class tend to behave alike: Social classes are relatively permanent homogeneous divisions of he society with each social class showing similar life styles values status prestige interest and behavior pattern. Social class in hierarchical : persons are ranked as occupying inferior or superior positins according to their social class of status held by them in society . mwmbers of specific social class perceive memvers of otohre social classes as aivng either more or less status as coared to them
Social class is not measured by a single variable but is measures as weighted function of one’s occupation income wealth education status prestige etc The upper class consists of a very small percent of the population they thave the benefits of ging to the best schools ocuupy executive position and inculcate the values of living graciously upolding the family reputaitn and displaying a sense fo community reponsibilityes The middle class comprises of a relatively higher percent of the population and is grwoong at a phenomenal rate Such a class of peole earn suffiecnty high income their dirce is to earn professional excellence and membership int the higher class There with their limited income try to copy the life styles of the upper class that is evident in their choice of clothing furnishing etc The lower lass which has the highest percent of population consisting of semi skilled manual labor lower level of supervisors who draw lower salaries and hence have a limited cice and having no money to waste on luxury
Social class is continuous rather then concrete with individuals able to move into higher social class or drop into a lower class This mobility either up or down can take place wither with more industrializations or degree of urbanization few of the successful men today have moved up to the upper class through shear determination and knowledge Social influence on consumer behavior There are broadly three groups in society who can influence the buying behavior of individuals 1. Groups that serve as comparison points : this refers to such groups who will be used as comparison to evaluate the indiviudla status . marketers try to use the cricket stars to promote products like coke Pepsi TCS etc .
The target customers comprise of youngsters reaming of becoming cricket star 2. Groups to which the individulaaspires to be a member : individuals have the tendency to imitate the behaviour of the individuals belonging to those grups they aspire to be a part of like HLL lux soap is a classic example where the film stars are used to promote the product to influence those youngster who cherish to be film stars 3. Lifestyle changes : Life style changes are witnessed in the rural areas . the potential rural market is not confined to few million large farmer households its true that the less privileged have a low purchasing power but their rising aspiration should not be underestimated . sychological factors • Scholars and researchers have identified four major psychological factors that influences buyer’s behavior 1. Motivation 2. Perception 3. Learning 4. Beliefs and attitude • Motivation : The driving force within an individual • Perception: the process by which an individual select organizes and interprets stimuli into meaningful and coherent picture of the world • Learning :The process by which individuals acquire the purchase and consumption knowledge that they apply to future related behavior • Belief and attitude :experience and learning people acquire beliefs and attitude. Our likes and dislikes are dependent on B& A [pic] Motivation : It’s a driving force and result of a state of tension resulting from unfulfilled needs • Needs :It can be defined as felt state of deprivation of some basic satisfaction . Every person has needs there are two types of needs 1. Primary needs (physiological) 2. Secondary needs (power prestige and achievement) • Goals Marketers are interested in consumer’s goal oriented behavior that concerns product service or brand choice • Goal selection depends on— • personal experiences • physical capacity • prevailing als are interdependent and cannot exist without the other. • Needs and goals are dynamic • Motives : Classified on the bases of unique character of interest • Physiological or psychogenic motives. satisfies biological needs & psychological needs like achievements affection or status) • Conscious or unconscious motives (hunger or good fit clothes) • Positive or negative motives. (attracts to desired goals or avoid unpleasant consequences e. g. fear can motivate a person to buy water purifier) • Physiological or psychogenic motives. (satisfies biological needs & psychological needs like achievements affection or status) • Conscious or unconscious motives (hunger or good fit clothes) • Positive or negative motives. (attracts to desired goals or avoid unpleasant consequences e. g. fear can motivate a person to buy water purifier) • Physiological or psychogenic motives. satisfies biological needs & psychological needs like achievements affection or status) • Conscious or unconscious motives (hunger or good fit clothes) • Positive or negative motives. (attracts to desired goals or avoid unpleasant consequences e. g. fear can motivate a person to buy water purifier) • Motivational conflict :compromises in our ability to satisfy various needs cause motivational conflict • Variety is spice of life (variety seeking behavior) 1. Approach –approach conflict (a stereo or tv) 2. Approach –avoidance conflict (purchase choice which has some positive and negative eg coke ) . 3. Avoidance –avoidance conflict (deciding between 2 alternatives e. g a damaged car) Consumer personality
Consumer motivation stimulate and direct consumers towards performing purposeful oriented behavior & the personality guides the behavior chosen to achieve specific goals in different situation . What is personality? Personality of an individual is made up of inherited characteristics, the interaction with the environment and individual conditions d Theories of personality are based on the fact • self concept (self image) theory • Psychoanalytic theory • Social /cultural theory (Neo- Freudian) • Trait theory Self concept (self image) theory Its very relevant theory and focuses on how the self image of individuals influences their purchase and other behavior.
For example ideal self actual self, ideal social self, actual social self & expected self An individual things himself /herself as an object The theory deals in totality with the individual’s thoughts and feelings regarding self Freud’s psychoanalytical theory of personality • Every personality is the result of childhood conflict • Freud believed that personality has three structures: the id, the ego, and the superego 1. Id is responsible for instincts, id is totally unconscious; it has no contact with reality 2. the ego, the Freudian structure of personality that deals with the demands of reality (reasoning) The id and the ego have no morality.
They do not take into account whether something is right or wrong 3. Super ego: is the moral branch of personality (conscience) The superego takes into account whether something is right or wrong Social /cultural theories (neo Freudian) theory • According to this theory an individual constantly strive to win over feelings of inferiority which is within them from childhood experience • An individual constantly searching for ways to win over feelings of love security and relationships Carl Jung’s theory • Carl Jung had conducted investigation of the unconscious dynamics wit te association test he grouped them into two basic type • Extrovert : More interested in social relationship Introvert : they were occupied with their own inner world of fantasy and body activity and was relatively incapable of outgoing social interactions in • According to Jung while gathering information the individual are strong in either sensation or intuition and while evaluating information they are either thinking or feeling Personality types • Sensing thinking personality (persons take rational objective decision) • Sensing feeling personality ( they are moved by the personal values and emotional in decision ) • Intuiting thinking personality (they take a road view of their own situation and the world use logic in making decisions and risk takers ) • Intuiting feeling personality : (they consider likely to others view and show least sensitivity towards prices ) Application of this theory in marketing The study of such psychological inventory indicators helps in learning about the impact of the four personality types on consumer behavior • Suppose the four personality type people are there in the market to purchase a two wheeler • Sensing thinking and sensing feeling will gather information about the product form various sources like auto magazine internet etc • The sensing thinking type will arrive at their own decision and purchase a two wheeler while sensing feeling ones will include the recommendation of mechanics and prefer to buy from a reputed serve dealer • The intuitive thinking and the intuitive feeling types will buy on their own gut feeling or hunch Trait theory • A human personality is composed of a set of traits that describe general response patterns • theory is quantitative A trait is any distinguishing and relatively enduring ways in which one individual differs from another • Trait influences behavioral tendencies Consumer Learning Definition and Meaning : It is defined as a permanent change in the behavior of a consumer as a result of past experience Learning involves a change in behavior Learning is a process Learning can occur by increase in knowledge through reading of books, thinking and discussions The behavior change is based on some form of practice or experience . The two vital aspects are behavior and Experience Learning can be intentional or incidental Components of learning process 1) Drive : It’s a strong stimuli that forces action . he drive arouses an urge to respond to the stimuli and is the basis of motivation Motive : IT is based on need and goals ,a motive is puoposeful and directed towards a specific goal but a drive means an icrese in probability of activity without actually specidiying the natureo f the activity Eg seeing a microwave in a friends lace and watching advertisement may create a drive to know more about the oven 2) Cue :a cue is any object existing in the environment as seen by the individual eg an advertisement of a package seen by an executive may act as a cue for an executive to enjoy a vacation with the family 3) Response : A Stimulus leads to a response The blue Pepsi was targeted to create a positive response in the minds of the Indian consumer by taking the advantage of world cup cricket matches and blue color association with the Indian cricket team . 4) Reinforcement : It is a very basic condition of learning without it we cannot observe any measurable modification of behavior. E. a girl finds using a particular brand of cosmetic helped her to win the beauty contest in her college se is likey to buy and use the brand of cosmetic again and again in this case learining takes place since she has won the contents after using the cosmetic for the first itme 5) Retention: The stability of learned behavior maintained by the individual over a period of time is called retention. E. g. a consumer who is absolutely delighted by the use of a product will continue to have a positive feeling about the product for a long time . Theories of consumer learning [pic] Classical conditioning :This theory is based on the postulate of therixtence of two stimuli primary & secondary and the two are in association with each other As the association between the two stimuli becomes strong it leads to the same reaction . Eg A psychologist Pavlov conducted the an experiment : He conducted the experiment with the help of the dogs . Whenever Pavlov gave food to his dogs he used to ring a bell the sight of food salivated the dogs .
Pavlov observed that just the ringing of bell ,without the sight of the food ,salivated the dogs . Application of conditioned learning in Marketing There are large number of identical products in market place a manufacturer of a less known brand is often seen imitating the packaging of well known brands . like recent manufacturers of gel pens have copied the add gel pen NIMA soaps copying the external packaging of Nirma Instrumental conditioning : This also requires development of a link between stimulus and the response. Here the individual determines that response which gives him greater satisfaction and the response is within the conscious system of the individual . Consumer learns through trial and error process .
A Favorable experience is instrumental in encouraging he individual to repeat the purchase behavior Application of instrumental conditioning in marketing The concept of habit formation in case of a product purchase can well be explained with the help of this conditioning. Eg Using surf Test drives of the vehicle Cognitive learning : This theory vies learning as a problem solving process rather than a mere association of stimulus and response . Need is the mother of invention Eg an Experiment by Kohler on apes [pic] Vicarious learning : A Type of cognitive learning is vicarious learning or observational learning e. g Boost is the secret of my energy Kapil Dev
Application of cognitive conditioning in marketing : Marketers always show positive results of using their products e. g. Models using cosmetics or soaps Cognitive Vs Behaviorist Theory : Nature of two leanings is different. Behaviorist approach gives little emphasis on thought processes and consumer attitude . This approach is more relevant when consumer’s cognitive activity is minimal e. g for information for convenience goods like tooth paste soaps salt its not really not worth searching for. Cognitive learning theory is more relevant for important and involving products E. g car house furniture or clothing Brand loyalty Brand Loyalty represents a favorable attitude towards a brand resulting in consistent purchase of the brand over a period of time
Behavioral Approaches to brand loyalty: The availability of data from the inshore scanners have made it possible to provide marketing managers with quick information on what people do As a result marketers are relying more on behavioral data generated through scanners and less on attitudinal and perceptual data generated during survey . Cognitive approach to brand loyalty: Behavioral approach in measuring brand loyalty is not cent percent true as there is some contribution of attitude and behavior . some time consumer is just buying a brand because there is no better product is available or the brand is offering price cuts Characteristics of a brand loyal customers 1) More self confident in the choice 2) He perceives a risk and to reduce it ,repeatedly buys the same brand . 3) The brand loyal customer may be store loyal ) Minority group customers are more brand loyal Meaning of involvement & decision making Meaning of involvement : a consumer is said to have a high involvement in purchase when he considered the product to be important and strongly identifies with it Conditions for involvement :a consumer is likely to be more involved with a product when 1. the consumer’s self image is tied to the product (rich farmer prefer bullet Youth prefers Enfield bullet 2. product has symbolic meaning tied to consumer values (ownership of BMW) 3. product is expensive (jewelry real estate ) 4. important functional values eg fuel efficiency of a vehicle 5. Product has emotional appeal 6. roduct has the continually of interest to the consumer 7. product has the significant risks eg buying a technologically complex product 8. product is identified with the norms of the group pokemon articles [pic] Situational involvement :specific situation and is tempory Enduring involvement continued interest in the product • Consumer attribution to situation versus product • Attribution theory :people attribute a cause to their prior behavior eg product vs situation • 1. Greater the degree of brand loyalty less important are situational factors like nescafe • 2. higher the level of enduring product involvement less important are situational influences . skin care product • 3. hen the product has multiple uses ,situational factors will be less important in determining the brand choice. dettol [pic] Reasons • Marketers are obsessed with their product and assumes customers are equally involved to the same degree, which results in highly complex advertising • It would be easy to focus on high involvement decision that is easier for them to understand and influence consumers if they assume consumers employ a cognitive process of brand evaluation Low involvement decision criteria If brand evaluation is minimal in low involvement conditions then how do consumers make decisions? • They follow relatively simple decision rules Follow principles of cognitive economy (The Cognitive economy revolves around memory, attention, perception, action, problem solving ) • By minimizing the time and effort in shopping and decision making • • Low involvement hierarchy 1. Rand beliefs are formed first by passive learning 2. A purchase decision is made 3. The brand may or may not be evaluated afterward • High involvement hierarchy 1. Brand beliefs are formed first by active learning 2. Brands are evaluated 3. A purchase decision is made Stategic implication of low involvement decision making • Marketing strategy • Advertising: difference in advertising approach • More budget in campaign of high repetition • Focus on few key points rather than brand based Visual and non message components should be emphasized • Advertising should be primarily means of differentiating the product from that of the competition there are no substantial brand difference for many low involvement products so advertising place a major role • TV rather than print media should be the primary vehicle for communication • Product positioning • Low involvement products are likely to be positioned to minimize problems and high involvement products are positioned to maximize benefits • Uninvolved consumers seek acceptable not optimal products Price For low involvement products – • consumer are more price sensitive • Brand comparison is unimportant Instore stimuli Low involvement purchases are unplanned In-store stimuli like coupons sale displays or price deal are important to encourage the customer to buy •
Shifting consumer from low to high involvement • Involvement means commitment • Link the product to an involving issue • Create a problem and solve it • Link the product to a currently involving situation • Link the product to an involving advertisement • Change the importance of product benefits like vicco • Introduce an important characteristic in the product like engine oil ———————– Consumer research and analysis Marketing strategy development Consumers behavior environment Marketing strategy implementation Learning theories Behaviorist Cognitive Vicarious Classical conditioning Instrumental conditioning Goal Purposive Behavior Insight Goal achievement