CB-II final

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DETERMINANTS of Consumer Behaviour

EXTERNAL DETERMINANTSINTERNAL DETERMINANTS

II

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BuyerPsychological

Personal

Social

Culture

Determinants of Consumer Behavior

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CONSUMER BEHAVIOUR PYRAMID

Consumer insight is like an ONION – the more layers you peel off, the more you can see.

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ConsumerPurchaseDecision

Motives

Personality

Needs

Perception

Learning

AttitudesB

usin

ess

Culture

Economic

Family

Social

SIMPLE MODEL FOR CONSUMER BEHAVIOUR

External Determinants

Internal Determinants

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CULTURALCULTURE SUB CULTURESOCIAL CLASSSOCIALREFERENCE GROUPSFAMILY & HOUSEHOLDROLE & STATUS

EXTERNAL DETERMINANTS

of Consumer Behaviour

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• Cultural – Sub culture – Social class are important determinants.

Culture• Culture is the fundamental determinant of a

person’s want and behaviour e.g.: A child growing up

USA : Practical, material comfort, individualism

freedom India : Philosophical, religious, respect for

elders, conservative.

CUTURAL FACTORS

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• Culture is learned

• Culture regulates society :

sets norms, standards, behaviours ,rewards and punishment (ostracisation)

• Culture helps life being efficient

• Culture is adaptive.

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Culture : Set of values, ideas and attributes that are accepted by a

homogenous group of people and transmitted to next generation.

• It is a mould in which a person is cast and controls his daily life in unsuspected ways (Edward Hall)

• Impact of culture is so natural and ingrained that its influence is rarely noted consciously.

• Sum total of learned beliefs values and customs that guide and direct behaviour of the members of the society.

• A selective man made way of responding to experience through a Behavioural pattern (Howard & Sheta)

• Culture consists of traditional ideas and values attached to these ideas. It includes Knowledge, beliefs, art, morals, law, customs, habits, norms, rituals, myths.

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Learning Culture

• (two terms to know) (i) Enculturation : Learning about one’s own culture (ii)Acculturation : Learning about new culture

• Three ways of learning culture (i) Formal learning : parents teach a child proper way to behave e.g.: wish good morning. (ii) Informal learning : imitating the behaviour of parents, friends, film actors eg. way of talking - loud. (iii) Technical learning : instructional methods e.g.. learning painting / singing

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Types of Culture : seen through different angles

(1) National Culture : prevalent in a

nation

(2) Popular Culture : prevalent across

nation

(3) Corporate Culture : prevalent

in companies work

place.

(4) Sub Cultures : prevalent

in small groups

within a larger framework.

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Dimensions of Culture : serve as basis of characterising, comparing and contrasting different cultures

(i) Individualism vs.. Collectivism – individual or fellow individuals e.g.: USA, Europe vs.. India, Japan

(ii) Power play – inequality and submission to authority – fast changing e.g.: Whites vs.. Blacks

(iii) Uncertainty – Tolerance vs.. Falling in line e.g.: Communism vs.. Capitalism

Talibalisation vs. Hippism

(iv) Masculinity / Feminity – role and superiority of sexes. e.g.: USA vs. Japan

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Sub Culture (smaller parts of culture) : An identifiable distinct cultural group which while following the dominant culture of the overall society also has its own distinct belief, values and customs that set them apart from others.

• Provides more specific identification

• Include : nationalities, religions, races geographical regions. E.g.: Yankees (USA), Japs (Japan), Pakis

(Pakistan) Jews, Surds, Bohris, South (India), Africans, Latinos

• Sub cultures often grow large, become influential and form groups.

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Categories of Sub Culture

• Nationality : Indian Chinese

• Religion : Hindu, Islam, Sikh Christian

• Race ; Blacks, Whites, Asians.

• Age : Young, Aged

• Sex : Male, Female, gay Lesbians

• Occupation : Teacher, Farmer

• Cast : Brahmin, Harijan

• Geography : South Indian, N East

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Social Class : The relative standing of members of a society.

• Human societies have always shown Social stratification

• Stratification results or takes the form of cast system – particular role in society (classic

case of Indian cast system)• Difficult to change cast membership • Casts (or groups of casts) takes the form of

Social class.• Social classes are hierarchically

homogeneous and enduring divisions of society.

• Social classes reflect – income, occupation, education, area of residence.

• Social class provides a sense of identity.• Social classes have a set of normative

behaviour.

SOCIAL CLASS

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• Social classes often have their own way of dressing, talking pattern recreation etc.

• Distinct characteristics seen in social classes

(i) Members within a social class behave in a similar way and distinct from members of other social class.

(ii) Depending on the social class its members are perceived to be superior or inferior.

(iii) Members of a social class are indicated by a cluster of variables and not by a single variable. Variables : occupation, income, education, value orientation, wealth, place of residence / neighbourhood, customs, activities.

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(iv) Individuals of a social class can move up or down the social ladder of social class in his life time. This will depend on the rigidity of social

stratification.

Social class preferences differ and become important for marketing• Distinct product and brand

preferences mainly in clothing, home setting, food, recreation.

• Distinct media preferences TV or Newspaper or

others within each media channels and

newspapers etc.• Distinct language preferences

like in a country India.

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Social Classification : The division of members of a society into hierarchy of distinct STATUS SOCIAL CLASS

• Upper – Upper

• Lower – Lower

• Upper – Middles

• Middle Class

• Working Class

• Upper Lowers

• Lower Lowers

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SOCIO-ECONOMIC CLASSIFICATION (SEC)

• A common index used by Marketers to describe Indian Population• Used by Media Researchers & Brand Managers.• Crafted by The Media Research Users’ Council (MRUC) and the Market Research Society of India (MRSI)•The new system introduced in 2011 replaces the previous one of 1980s

Classifying a Householdin the new SEC system

It’s based on two variables:

• Education of chief earner

• Number of “consumer durables” ( from a predefined list-owned by the family )

The list has 11 items, ranging from ‘electricity connection’ and ‘agricultural land’-to cars and air conditioners

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The Old System• Separate for Urban and Rural• Urban: Classification on two parameters of the

Chief wage earner - Occupation - Education A to E (A1 A2 B1 B2 C D E1 E2)

• Rural : Classification on two parameters

- Education

- Type of house Draw backs R1 R2 R3 R4

There are 12 grades in the new SEC system

Ranging from A1 to E3 The separate Urban and Rural grading

has been mergedA1 A2 A3

B1 B2C1 C2D1 D2

E1 E2 E3

DISTRIBUTION OF HOUSEHOLDSIndia (urban + rural)

*Figures in Percentage

New SEC System

Advantages of the NEW SEC SYSTEM

More discrimination as compared with current systemsA single system for urban and and rural IndiaLess subjectivity-as occupation is no longer usedIt’s simple -easy to answer, not very time consuming, easy to classifyThe new SEC system is able to reduce heterogeneity within social grade-and stretch the differences by grade

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SEC : Broad Understanding

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Other expressions: Blue – Grey – White Collared

workers.

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Social Factors

Groups•Membership•Reference

Family•Husband, wife, kids•Influencer, buyer,

user

Roles and Status

Social Factors

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Main Social Factors Reference Groups Families and Households Social Role and Status

Reference Groups• All those groups (I.e. collection of people) who

have direct or indirect influence on the person.

Direct Influence Persons belong to or are member of the Group• Membership group: group that has direct

influence. They are of two types.

SOCIAL FACTORS

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Primary Group

The group with whom the person interacts regularly (fairly continuous) and informally e.g.: Family, Friends, neighbours, Colleagues.

Secondary Group The group with whom the person interacts but not so regularly and does so more formally. e.g.: Religious groups, professional Groups, Trade Union / Political Groups

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Indirect Influence Persons does not belong / member of the group

• Two types of such groups

(i) Aspirational Group: - The person wants to

join this group - Wants to have values of this group and

behave like them.

(ii) Dissociative Group - The person does not want to join the group.

- The values and behaviour he rejects / does not like.

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• Significantly influences in three ways.

(i) Exposure: Individual is exposed to new / different / certain behaviours, life styles.

(ii) Influence The attitudes and concepts of the individual is formed / changed / rejected.

(iii) Pressure Creates pressure on individual to confirm to behaviours and attitudes forcing product and brand choices.

INFLUENCE OF REFERENCE GROUP

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DETERMINANTS OF REFERENCE GROUPS

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• Level and Intensity of Influence

The level of influence varies among product and brand.

- Strong influence on both product & brand Cars, Flat, Colour TV

- Strong influence on brands Clothing, watches,

- Strong, influence on products Alcohol, Cigarettes

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• Family is the most important consumer buying unit in society.• Family members are the most influential primary reference

groups.

• Family is therefore important to understand

Family : A group of two or more persons residing together and related by virtue of blood marriage or adoption.

Types : Nuclear family: Father, mother, children

Extended family: above and other relatives, grand parents, uncles, aunts, in laws

etc.

Household : All persons related or unrelated who stay together Family is the most important household Others : Living together couples, Living alone, Friends living

(above may or may not include children)

.

FAMILY & HOUSEHOLD

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Family in Buyer’s life – two distinct ones(i) Family of Orientation – family he is born into

• The family of parents, brothers, sisters ( and other immediate relatives staying together in a joint family like India)

• Person acquires an orientation towards food habits, clothing's, religion, economics, beliefs, love etc. Such influences remain throughout his life even when he makes his own separate family.

(ii) Family of Procreation – family he makes i.e. by marriage.

• The family involving his spouse, children, in-laws (in India).

• The spouse brings in her own behaviour and beliefs from her own Family of Orientation

• A mix / metamorphosis of two families orientation takes place giving rise to a resultant behaviour of Family of Procreation

FAMILY & HOUSEHOLD

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Functions of a Family:(i) Economic well being

(ii) Emotional support

(iii) Suitable life style

(iv)Family members socialization

Influence / Effect of Family Members• Role and relative influence of the different Family members

vary • The influence varies with the variety in products being bought.• The roles vary with nationalities and social classes.

e.g.: Nationality / Social class India : Male members of the family have more influence. USA : Both have equal influence

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Family Life Cycle• The family life of a consumer passes through

different stages and his behaviour changes in each stage.

• The consumer need not necessarily pass through each stage and may skip some

• Family spending changes in each stage and a major determinant of consumer Behaviour.

Family Life Cycle stages

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Family Life Cycle Stages

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• Family influence varies with products

Flat / Car / TV - Husband’s domination Grocery - Wife’s domination Holiday - Whole family gets involved.

• Women’s influence is rising all over the world with emancipation / working & earning, job descriptions etc.

• Unitary families ( change from joint families) is empowering all members of the family.

• Changing market places like rise of malls which make a family outing ensure presence of whole family during buying.

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INSIGHTS TO INDIAN FAMILIES

India : Individuals :1120 m

Families :226 m

Married :570 m (51%)

Avg. Family size : 5 (approx)

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LOOK OF INDIAN FAMILIES SEC (SOCIAL CLASS)

SEC FAMILIES INDIVIDUALSA B

The Consuming class

C

The Aspiring class

D E F

The Underpriviledged class131 m 634 m

51 m 260 m

44 m 217 m

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LOOK OF INDIAN FAMILIES LIFE CYCLE STAGE

FAMILIES %

Joint family of 3 generations 21%

Baby Sitters (eldest child below 12 years) 21%

Maturity Mentors (youngest child above 12 years) 45%

Nest Builders ( yet to have children) 7%

Free Birds (single / independent) 1.3%

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LOOK OF INDIAN FAMILIES SOME FINDINGS

Kannadas Highest per capita monthly family income Rs. 2190/- (Indian average Rs. 1350/-)

Biharis Lowest per capita monthly family income Rs. 730/-

Marwaris Highest loan servicing 15.5%

Gujratis Highest ownership of automobiles (inclusive 2- wheelers) 49%

Tamils Highest ownership of Colour TV's 89%

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• A person is a member & participates in more than one group. e.g.: Family – Office – Clubs – Professional / Social associations.

• In each group he has a different role & status

• Depending on his role he performs / expected to perform certain activities.

e.g. Family -Husband Office -Work in assembly line of car Club -

Member Management Association - Committee

member

ROLE & STATUS

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• His group gives him a certain status depending on his role he performs. e.g.: Family - Head of the family Office - Supervisor Club - Ordinary member only Association -President

• The status is comparative vis a vis other members of the group.

• People behave, act and purchase products depending on his role and status – status symbol e.g.: The Managing Director of a company will

drive a status car like Mercedes. An actress buys designer clothes.

A salesman wears and buys Ties.• Marketers need to exploit this role and status of

a buyer.

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INTERNAL DETERMINANTS of Consumer Behaviour

Personal factorsAge and LifecycleOccupation and FinanceNeeds , Wants, values and involvementsLifestylePersonality and SelfPsychographics

Psychological factorsMotivationsPerceptionLearningBeliefs and Attitudes

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Personal Factors

Personal Influences

Age and Family Life CycleStage Occupation & Finance

Lifestyle

Lifestyle Identification

Activities Opinions

Interests

Personality & Self-Concept

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Age & Stage in Life Cycle Age

• Over a life time people have different requirement, preferences and likings at different age.

e.g. Food

Baby - Baby food

Child - All food (including junk food) Adult - All food Old -

restricted / special food.

PERSONAL FACTORS

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Family Life Cycle• Over a life time people go through different stages

of Family Life cycle.• The main determinants for consumption, at

different stages are • Financial standing• Product interest• Needs and requirements• Psychological changes – transformations

All house holds or persons are not family based. e.g.: Single households, co habitors, gay

households.• Changing life circumstances

e.g. : Divorce, remarriage, widowhood etc.

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THE TRADITIONAL FAMILY LIFE CYCLE

Young single

Young married without children

Young married with children

Middle aged married with children

Middle aged married without dependent children

Older married

Older single

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Occupation The occupation of a person influences behaviour and consumption e.g. - a banker wears a black suite - a salesman wears a tie

- the high earning IT crowd eats ready food Finance Product choice, consumption and behaviour is greatly effected by • Earning levels• Disposable income• Savings and assets• Economic circumstances• Borrowing power

e.g. : Bankers follow accounts to reach out for investments IT / Young professionals buy flats, cars at early stage.

OCCUPATION AND FINANCE

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Need: Need is a feeling of being deprived of something desirable. The gap between one’s current state and a desirable state It is basic in nature e.g. Need for quenching thirst. Need to do P. G. in Commerce

Wants: Desire to obtain the satisfaction potential of the Need. It is the acquired needs e.g.: Water to quench thirst. Admission to P. G. course.

NEED & WANTS

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Categories of Need

(i) Physiological needs -innate, biogenic and required tosustain life. e.g.: food, water, air, sex

(ii) Psychological needs -inner and mental e.g.: love, care, competence, safety, affection

(iii) Learned needs - secondary & acquired from society e.g.: respect for elders, going to a funeral shelter and safety

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Need Arousal:

by four distinct types of stimuli(i) Physiological – arising out of body requirements

e.g. thirst, feeling cold, blurred vision(ii) Cognitive – arising out of the mind

e.g. remembering to wish a friend on his birthday(iii) Environmental – arising out of the circumstances

e.g. finding a suitable flat in a proper locality(iv) Emotional – arising out of heart

e.g. lonely parents missing their children

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What determines needs(i) Personal characteristics

Genetics, allergies, physical differences biogenics , gender, age. Psychogenic – moods, emotions

(ii) Physical Environment Climate – Winter (cold), Summer (warm) determines clothing Topography – desert, mountain determines transport or house Ecology – pollution, sun light determines use of masks or goggles

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Dynamic nature of NeedNeeds are constantly changing• Needs are never fully satisfied• New needs emerge as old needs get satisfied

ValuesA person’s basic ideas about what is desirable

Types of Values(i) Terminal Values : Desired end state-

eg. Higher education

(ii) Instrumental Values: Endorsed or means that are needed to achieve the desired end state. eg. Disciplined and sincere study

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InvolvementThe degree of personal relevance of an object or product (goods or service) based on one’s inherent needs, values and interests.• Involvement can be:- Enduring i.e. interest on ongoing basis- Situational i.e. interest in a specific situation or occasion Types of involvement(i) Product involvement : crutch of a handicapped person.(ii) Advertising involvement : Pug in Vodafone advertisement(iii) Purchasing situation involvement : eating out in

a mela / during Puja

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Increasing involvement - Strategies(i) Target Hedonic need (more for enjoyment & pleasure.(ii) Use Novel and prominent stimuli(iii) Include celebrity endorsements(iv) Relationship management.

Reasons of involvement : some of the major ones- Important- Interesting- Fascinating- Appealing- Priceless

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A person’s consistent way of living as seen and expressed in his activities interest and opinions It normally is seen to portray the complete person.

• People from same Groups (as studied earlier) may have different life styles.

• Relation ship exists between life styles and product / brand choice and hence to consumer behaviour.e.g.: achiever’s wear certain types of clothes liberals allow children to discotheques. Tech savvy, Glob trotter, sports enthusiast Reckless and casual, bohemian, permissive

LIFE STYLE

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Personality A set of distinct psychological traits that results in / leads to consistent response to external stimuli e.g.: of personality self confidentwork alcoholic introvert dominant

friendly extrovertadaptable dogmatic

perfectionist amiableaggressive conscious

• Personality has a link to product / brand choice hence to consumer behaviour.

• Brands also have personality and when it gels with human personality it results in choice

purchase.Brand personality : mix of human traits that can be attributed to a particular Brand.

PERSONALITY & SELF CONCEPT

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Theories of Personality • There are many theories and the most discussed

one Freudian Theory (Psychoanalytic theory of personality) - Human personality consists of three interacting systems or forces within him

(i) Id : Basic expression for which he needs immediate satisfaction without concern

of means.eg. Child crying in hunger only component of personality that is present from birth entirely unconscious and includes of the instinctive and primitive behaviorssource of all psychic energy, making it the primary component of personality.

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(ii) Ego : Conscious and controlled expression the component of personality that is responsible for dealing with reality. e.g. wont say sorry when he is at fault.I will work as manual labour to earn than to sit idle

(iii) Super Ego : Internal expression of social code of conduct.the aspect of personality that holds all of our internalized moral standards and ideals our sense of right and wrong e.g.: Super heroes / actors not seen in person. Beauty Queens won’t mix easily. I will die of hunger but never beg / borrow /steal

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Freud’s Psychoanalytic Theory Personality results from the clash of 3 forces - the id, the ego, and the superego

– The id represents physiological drives

– The ego acts to curb the appetites of the id

– The superego is the conscience or “voice within”

The "id" says "I have to go pee". The "superego" says "You have to wait to find a bathroom". The "ego” says"I will look for a public bathroom and go there.”or "I will look for the nearest tree and go behind it”

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• Self concepts can vary

1. Actual self concept – how one views oneself

2. Ideal self concept - how one would like to view one self.

3. Other’s self concept – how one thinks others see him / her.

Matching self concept with Brand personality results in purchases.

Self Concept

• A consumer may consciously / unconsciouslychoose a self concept in a buying situation.

Difficult to predict and controversial.

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• Each person has a personality comprising of some personality traits (often more than one) which the person sees as his self “This is all that I am”

• Personality has four essential characteristics

Behavior must show consistency over time.

Behavior should distinguish the person from others.

Personality characteristics are not rigidly connected to specific types of behavior.

Personality variables often moderate the effects of other variables on behavior

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COMMAN TRAITS OF BRAND PERSONALITIES

Jennifer Aaker conducted research into brand personalities and identified the following five traits:1. Sincerity (down-to-earth, honest,

wholesome and cheerful)2. Excitement (daring, spirited, imaginative

and up-to-date).3. Competence (reliable, intelligent and

successful)4. Sophistication (upper-class and

charming).5. Ruggedness (outdoorsy and tough)

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COMMAN TRAITS OF BRAND PERSONALITIES

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• Using psychology and demographics to understand the behaviour of buyers

• Personal in nature of the buyers.

PSYCHOGRAPHIC FACTORS

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A very popular classification system based on Psychographic measurements • Commercially available and used

extensively in USA.• Done through response to questionnaires

featuring 45 demographics and about 35 attitudinal inputs.

• Update regularly every year.

Such studies exist in different countries – separate for each as the variables are

different.

VALS - FRAMEWORK

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VALS Principle Oriented Status Oriented Action Oriented

Achievers

Actualizers

Strugglers

Strivers

Fulfilleds

Believers

Experiencers

Makers

Abundant Resources

Minimal Resources

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Psychological Factors

Psychological Factors

Motivation

Perception

Learning

Beliefs and Attitudes

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Four major factors

1. Motivation

2. Perception

3. Learning

4. Beliefs & Attitudes

PSYCHOLOGICAL FACTORS

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Motivation : • The driving force in a person that impels him

into action.• Positive vs. Negative motivations.

Motive:• A need sufficiently aroused to a stage that it

drives a person to act.• There are always complex motives behind

purchasing decisions.• Often the underlying motive is different from the

stated motive. e.g.: Purchasing Rolex watch It is for accurate time keeping or as a status symbol.

• Emotional & Rational motives

MOTIVATION

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• Psychologists have developed many theories• Three most accepted and recognised theories

(i) Freud's theory

– Sigmund Freud

(ii) Maslow’s Hierarchy theory –

Abraham Maslow

(iii) Herzberg's Hygiene Factor theory –

Frederick Herzberg • These have quite different approach and

thereafter different implications in understanding consumer behaviour.

THEORIES OF HUMAN MOTIVATION

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• Assumes the psychological forces are largely unconscious.

• A person does not understand his own motivations.

• A technique – called laddering can be used to trace a person’s motivation i.e. Put the product characteristics in ascending

order and start from basic ones and climb to terminal ones.

Study the reactions and decide which level to trigger in marketing exercise.

Buying a mobile: talk to camera to e mail to intrnet.

FREUD’S THEORY

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• Applicable to all aspects of motivation.

• Based on hierarchy of needs

• People are driven by particular needs at particular times.

• Needs are arranged in an hierarchy.

• Hierarchy is from most pressing to least pressing needs.

• People will try to first satisfy the most pressing needs and then hierarchically to the least pressing need.

MASLOW’S THEORY

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Maslow’s Hierarchy of Needs

Esteem Needs(achievement, status, reputation)

Social Needs( belongingness, love, affection,

relationship)

Safety Needs(security, protection, stability, law, order)

Physiological Needs(basic life needs, hunger, thirst, shelter, sex, sleep)

Self Actualization(Personal growth & fulfillment)

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• Two factor theory (calls – hygiene factors)(i) Factors that cause dissatisfaction – dissatisfiers (ii) factors that cause satisfaction – satisfiers.

• These two are not exclusive in sufficient conditions i.e. no dissatisfier – hence buy or only satisfier – hence buy is not true. Eg. Buying a watch : no warranty is a dissatisfier. It does not mean it will be bought if the warranty is there but design is unacceptable.

• Factors that may not sell but can easily un sell the product.

• Remove reduce dissatisfier – Increase / Introduce satisfiers.

HERZBERG’S THEORY

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Perception : The process by which a person selects, organises and interprets inputs (information) to create a meaningful picture for himself.

• A motivated person ready to act but how he will act is influenced by his perception. e.g. : hungry and ready to eat – one orders – boiled food other orders – spicy Chinese food

• Perception is a mental process – cognitive and thinking

• Information inputs are sensations received through seeing, tasting, hearing, smelling feeling and touching,

PERCEPTION

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• Perception being intellectual and Cognitive is subjective in nature

• Perception depends on (i) Physical stimulus external (marketing mix)

internal (past experience) (ii) Relation of stimulus and surrounding (iii)Condition of the individual motives at that time

• Perception varies among individuals exposed to same reality e.g.: sales person in a shop counter trying to help may be seen as interfering / aggressive or dutiful / cooperative

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Consumer Imagery

Consumer try to preserve and enhance their self image by buying products that agree with their self image and shunning that don't e.g.: Film actors buying expensive sun glasses

Royalty marketing at Harrods

Perception ProcessSensation – attend with one or more of the five senses.

Organisation - matching the sensation with similar ones in memory.

Interpretation - attaching meaning and then by making judgments of value and liking. e.g.: Tasting of a drink

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Subliminal Perception

Perceiving a stimuli without being consciously aware of the stimuli ie. When the stimulation is below one’s level of conscious awareness

Stimuli below limens i.e.. too weak or brief for conscious awareness may be strong enough to be perceived by our receptor cells of the brain.

• Absolute threshold of sensation : lowest level to experience a sensation Differential threshold of sensation : minimum difference to detect between two stimuli.

• Threshold of conscious awareness is higher than absolute threshold for perception.

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Threshold of conscious awareness

Absolute threshold of sensation

Subliminal Perception

Differential threshold of sensation

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• Subliminal advertising : A person is not aware of receiving a message but it is found that the message was working Experiment (1950’s) : In a cinema hall “Eat Pop Corn” “Drink Coca Cola” was being flashed quickly on the screen during screening . Too fast to be aware of. Sales after 6 – weeks : 58% rise in Pop corn18% of Coke.

The 10 Best Subliminal Ads Ever Made

One of the oldest and most noted examples, the ad’s other message becomes obvious when the image is inverted. Wrong. It’s a real Yellow Pages ad.

For years people have claimed the ice on top of the can forms the silhouette of a nude.

Coke’s naked ice lady

Gilbey’s Gin

Many people think that the appearance of the word “sex” in the Gilbey’s ice cubes is deliberate. But think about this: How does that help Gilbey’s sell cocktails?

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Reasons why different perceptions emerge out of same object reality The three perceptual processes (i) Selective attention

(ii) Selective distortion (iii) Selective retention

PERCEPTUAL PROCESSPerception Process – how it happens

Sensation – attend with one or more of the five senses.

Organization - matching the sensation with similar ones in memory.

Interpretation - attaching meaning and then by making judgments of value and liking. e.g.: Tasting of a drink

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• Classical case of strand cigarette advertisement with Humphrey Bogart who was also a great role model of the product. The scene: Great and strong character Humphrey Bogart walking the dark streets of London while it is raining and smoking his cigarette.

Perception: By consumer’s was a dysfunctional lunar in long Raincoat was stalking the streets. Failure: Consumers perceived it differently from the marketer.

Nature of Perception

A linear flow takes place from Exposure Attention Interpretation Memory

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• In normal / daily life a consumer is exposed to numerous stimuli –marketing inputs / information.

• It is not possible to note / attend to all and most of them will have no effect / screened out.

• Only some will get consumer’s attention / notice • The ones (stimulus) that have the highest probability of

getting noticed will depend on (i) Consumer’s current need (wishing to buy) Notices automobile ads if thinking of buying a car.(ii) Anticipation of the situation Notices details of cars in the Auto magazine(iii) Large unexpected deviation of the stimulus from normal

e.g.: 80% off against 10% off. Sudden movements on special offers in a mall.

SELECTIVE ATTENTION

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• Stimulus is noticed but not in the intended way.

• Stimulus (information) is twisted / distorted so that it fits into one’s personal meaning / preconception

• Results in negative impact

e.g.: A tele call for an offer is interpreted as a product not selling or forced selling hence reject it.

SELECTIVE DISTORTION

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SELECTIVE RETENTION

• People forget most of the stimulus (information) that had received attention.

• People retain only those stimulus that meets / supports / reinforces his personal attitudes & beliefs.

i.e. remembers what he likes to remember good or bad of the product he chooses vs.. the competing products.

Repetition of favourable stimulus is thus repeated for marketing purpose.

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Learning : The process of change in a person’s behaviour arising out of experience and information.• Learning arises out of a person’s actions• Most human behaviour arises out of his

learning.• Learning is a function (interplay) of the

following elements.(i) Drive - a strong internal stimulus that

sets action. Sufficient motivation.(ii) Cues - minor stimulus but

influences when where and how a person reacts / responds. Price, displays, packaging, market place

LEARNING

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(iii) Reinforcement –

Satisfaction from a Company’s product reinforces purchase of other products from same Company / manufacturer i.e. likelihood of a specific response to similar stimulus , information or cues.

(iv) Discrimination -

Dissatisfaction from a product / brand / make has opposite response generalized to the Company / manufacturer

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• Knowledge : Familiarity with a product and expertise.

• Consumer Learning Process to acquire knowledge and experience

of purchase and consumption which is reflected in subsequent behaviour.

• Learning Process : two main process Intentional : Purposeful learning by careful

search of information. Incidental : accidental learning without much effort

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Measuring Consumer Learning(i) Recognition and recall (aided or unaided)(ii) Cognitive response(iii) Copy testing measures(iv) Attitudinal and Behavioural measures of

Brand LoyaltyThree Hit TheoryRepetition is the basisIt is agreed / believed that three repetition works.

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Learning Theories - two major categories

(i) Behavioural Theories :

Based on the premise that learning takes place due to observable response to external stimuli

(ii)Cognitive Theories :

Based on the premise that learning takes place due to mental information processing in response to problem solving. How it is stored, retained & retrieved

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BELIEFS & ATTITUDESBelief A descriptive thought a person holds about something.• By doing & learning people acquire belief

and certain attitude towards some products / brands.

• Beliefs may be based on real knowledge, opinion or faith.

• Beliefs may or may not carry emotions.• Beliefs and attitudes are carried to buying

decisions and is therefore important to marketers.

• Belief reinforces product and brand images.

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• They are strong factors difficult to change

e.g. : Swiss Chocolates are the best Chinese goods are

cheap / bad. Margo soap has Neem and therefore good.

• Unfounded beliefs are damaging and need to be changed. e.g.: This shop serves wrong meat This is a sleazy joint (restaurant / hotel)

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Attitude

A person’s relative consistent evaluation, feeling and tendency towards a product or an idea.• Attitude determines frame of mind for liking

or disliking, attraction towards or away from products or ideas.

• difficult to change. Change will involve difficult adjustments.

• Attitudes formed in early childhood remain for life.

• Mental disposition in favour or disfavour.

• Many times attitudes are dependent on situations.

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Structural Models of Attitude

• Help us understand relationship between attitude and behaviour.

• The approach is of specifying a composition of attitude to explain or predict behaviour.

• How the components of attitudes are arranged, related and work.

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TRICOMPONENT ATTITUDE MODEL

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1. Tri component Attitude Model

• Attitude consists of three major components Cognitive – Affective - Co native

(i) Cognitive : Person’s cognition i.e. Component knowledge, perception which has developed belief, images,

memories. Person with

strong thinking.

(ii) Affective : Person’s emotions and feelings. Component People with strong feeling

(iii) Co native : Person’s Predisposition or Component tendency to act in a way.

People with fixed notions

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2) Multi attributes Attitude TheoryA persons perception, assessment, beliefs of key attributes.

(i) Attitude Toward object : does it have desired attributes.

(ii) Attitude toward Behaviour : does it suit my behaviour

(iii) Attitude toward Reasoned action : does it have good reasons.,

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Attitude Formation : Three concept areas of

attitude formation1. Learning of attitudes:

- Shift from no attitude to an attitude. - It is a result of learning - Attitudes can be formed before or after a

purchase

- Learning comes form :

information exposure, cognition (knowledge & belief and experience

2. Source of influence: - Sources like, personal experience, family

friends, mass media direct media and their relative

experience

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3. Personality factors: - Personality is different for all individuals. - People of different personality form attitudes towards a product arising out of different reasons. e.g.: Personality of

High cognition - buys Sony TV because of Digital

reproduction Low cognition –

buy Sony TV because of celebrity use.

Attitude ChangeStrategies used4. Change basic motivations5. Associate with admired group or event.6. Resolve conflicting attitudes7. Alter attributes8. Change beliefs about competitor brands / products.

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Cognitive Dissonance• Discomfort that occurs when there are confusing

thoughts about a belief ( regarding product / brand and its purchase)

• It is often felt Post purchase and is normal i.e happens often in- Have I made the right purchase?

• Reducing this dissonance (feeling happy about his choice)

- rationalise decision to be wise - seeking advertisements / communications in support - talk / tell about the product’s good features -look for satisfied consumers of the product - specific message of reassurance from marketer.

e.g.: congratulations for having bought the TV with highest pixels - relationship

programs for users i.e. develop affinity - reassurance is the answer.

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MINING THE INDIAN YOUTH MIND

ATTITUDES BELIEFS PERCEPTIONS

in a Transforming World

1 Billion+ Population In The World’s Youngest Country

24

31

3639

30

39 37

44

38

44

0

5

10

15

20

25

30

35

40

45

India USA China Russia UK

20002025

• At 24 years, India has the lowest median age of population in the world– 50% of India’s population is less than 25 years & 70% is less than 35

years

Median Age of Population (in years)* Source: Central Statistical Organization, Population Division, United Nations

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Proportion of Young Population (< 25 years)**

India 53%China 42%Indonesia 30%USA 30%Brazil 29%Japan 27%Germany 26%

The Young India

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Young men are more fashion-conscious as compared to young women

Young rural men are more supportive of greater gender equality than their urban counterparts

Small-town youth are more satisfied with the existing educational facilities than those from villages and big cities.

Young urban women are least supportive of reservation for women in Parliament.

Corruption, illiteracy and terrorism aren’t primary national concerns among the youth.

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Dalit and Tribal youth have higher aspirations in life than those from forward castes and OBCs.

For the youth, job guarantee should be the first priority for the nation followed by quality healthcare and education.

Over two-thirds of youth consider alcohol consumption unacceptable

Urban youth favour improved friendly relations with Pakistan as compared to rural youths.

Small town youth have the highest level of aspirations in life than those from metros and villages

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OPENION LEADERSHIPINNOVATION DIFFUSION

& ADOPTION in Consumer Behaviour

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The concept and importance of Opinion Leader arises / comes from the concept of importance of Reference Groups

Who is an Opinion Leader• Is a person of the Reference group• makes informal product or brand related

communications.• Offers advice or information on specific

product, product category, brand.• Advice or information on which is best or

how to use the same.• He is therefore a important person for the

marketers.

OPINION LEADER

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Getting Opinion Leader to use• How to reach the Opinion Leader.• How to influence the opinion Leader.• Identify demographic and Psychographics

characteristics of the Opinion Leader • Identify relevant media reach

(media the Opinion Leader normally is using)

• Directing appropriate communication to the Opinion Leader.

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• The process of one person informally influencing the consumption, action or attitudes of others who see or receive the same.

• It involves three parties Opinion Leader - the person(s) who influences Opinion Seeker - the person(s) who actively seek the opinion / information / advice Opinion Receiver - the person(s) who voluntarily or non voluntarily get the opinion / information / advice

OPINION LEADERSHIP

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• It is an informal flow of opinion related influence

• Normally referred as word of mouth influence - literal word of mouth face to face or over

communication networks (telephone) - E-mails, Blogs are now part of this process

• Impacts consumer behaviour

• The Leader is part of Reference Group (friends, neighbours, acquaintances aspiration characters

• Interpersonal in nature and does not involve the marketer directly

• Opinion leaders can become opinion seekers in other context.

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• Generalised profile. Very difficult to be specific

• General attributes Innovators and first users . experienced

Willing and enjoys to talk, attention seeking Self confident, Gregarious, and has Cognitive Differentiation Unbiased - provide both favourable and unfavourable information High Status – Social, demography, personality.

PROFILE & CHARACTERISTICS OF OPINION LEADER

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• Category specific attributes

first hand information, enduring involvement, interest.& knowledge on the subject / product / brand Media exposure (specific interest media) Similar demographic characteristics, age and social status Wide Social exposure.

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i.e. the flow of information from source (beginning) to end (receiver)

• Two step flow process - ideas, information, flows from Mass media to Opinion Leader. - Opinion leader is the middleman between mass media & general public.

• He receives, filters, interprets and provides information for individuals within groups in a linear way

PROCESS OF OPINION LEADERSHIP

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2. Multi step flow process - Besides the above there is two way

communication -Opinion leader influences and also in the

process gets influenced (by seekers). - His assimilation and presentation gets into revision in multi steps to complete the role.

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Likelihood of Seeking an Opinion Leader

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• Four popular methods (Research methods)

1. Self designating method

• Asking the respondents how many times and to what (how much) extent they have provided information or influenced purchase decisions

• Most commonly used & easy to use.

• Self evaluation of respondents can be biased.

MEASUREMENT OF OPINION LEADERSHIP

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2. Sociometric method

• Ask the respondents (i) The specific people ( and nos.) to whom they have provided opinion leadership. (ii) The specific people (and nos.) from whom they seeked opinion.

3. Key informant method

• Ask one knowledgeable person about who are likely to be the opinion leaders in the group / society.

4. Objective method Choosing / selecting individuals, then provide them information and ask them to pass it Trace the result and see.

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• Opinion leadership has powerful influence on purchase decisions

• Seek opportunity and encourage word of mouth that must be favourable. e.g.: premier of a movie

• Design product (position) to have potential for word of mouth (product gives something to talk about). e.g.: Viagra

• Stimulate word of mouth i.e. Advertisement or promotional activities or direct marketing which are interesting & informative to provoke discussion. e.g.: Sun silk – Gang of HUL

• Uncontrolled word of mouth or negative word of mouth can be devastating

INFLUENCE ON MARKETER’S PROMOTION POLICY

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INNOVATION

DIFFUSION &

ADOPTION

in Consumer Behaviour

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A new product (goods or service), idea or practice from a marketer• Firm oriented

New product from the company (marketer) i.e. new to the company

e.g.: ITC enters shampoo market • Product oriented

New features of the product and its impact. New features can be part of

(i) Continuous innovation : latest version of MS Office (ii) Dynamic innovation : disposable diapers (iii)Discontinuous innovation : Mobile phone, Flat TV

INNOVATION

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3. Market Oriented Newness of the product to the consumers

i.e. purchased by a few up till now or has been available for a short time e.g.: Pod casts, Mobile Video

4. Consumer Oriented Product that the Target Consumers view as new

to them. Launch of Macdonald or Barapaw King in Mumbai

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Consumer Innovator

• Small group of consumers who are earliest buyers of new products. They are often Opinion Leaders. Characteristics 1. Interest (in product category) 2. Opinion Leaders 3. Personality traits – not dogmatic, open

minded, variety seeking, risk taking 4. Less Brand loyal, deal prone 5. Media habits – read, hear, see more 6. Social involvement – upper class in society 7. Demographic – young (match age with product use)

Resistance to Innovations 1. Habit 2. Perceived Risk

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• A Macro process by which the acceptance of an innovation (new products, service, idea or

practice) is spread by communication ( mass or personal media, formal or informal) to Target consumers over a period of time

• The four elements of diffusion are 1. The innovation (Product characteristics) 2. The channels of communication 3. The social system 4.

The time frame

DIFFUSION

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1. Product characteristics

(i) Relative advantage & disadvantage compared to

existing ones.

(ii) Compatible to needs, values & practices

(iii) Complexity i.e. degree of ease in understanding &

use (iv)

Triability i.e. capable of limited use before buying

(v) Operability i.e. capable of delivering

benefits.

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Influences on the Rate of Adoption - New Products

DivisibilityCan the innovation

be used on a trial basis?

CompatibilityDoes the innovation

fit the values and experience of the

target market?

ComplexityIs the innovation

difficult to understand or use?

Relative AdvantageIs the innovation superior to

existing products?

Communicability Can results be easily observed

or described to others?

ProductCharacteristics

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2. Channels of communication

Communication between marketer & consumer • Communication between consumer themselves - Source• Personal• Commercial• Public• Experimental

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3. Social system The environment and circumstances of operation e.g.: Focus away from red meat to lean meat Social consciousness for health

4. Time Purchase time :

Elapsed time from initial awareness to purchase Time taken by different categories

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The Micro process of stages through which the Target consumer passes when deciding on the purchase i.e. from first hearing of it to finally using it.Types of adopters (categories)• Innovators (2.5%)

Venturesome, daring Cosmopolitan• Early adopter’s (13.5%)

Have opinion leader, roll models.• Early majority (34%)

Deliberative • Late Majority (34%)

Skeptical, Cautious • Laggards (16%)

Traditional, SuspiciousNon adopters Unaware, does not find useful, knows its usefulness but has not used, tried but not use, not ready to try.

ADOPTION

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ADOPTION OF INNOVATION CURVE

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Stages : Five stages

• Awareness : exposure to innovation

• Interest : searches for additional information

• Desire (Evaluation) :Compares the informations / studies

• Action (Trial) : Limited use (quantity or time)

• Adoption or rejection: continuous basis

ADOPTION PROCESS

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Awareness

Interest

Evaluation

Trial

AdoptionADOPTION PROCESS

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PRODUCT ADOPTION PROCESS

The DAGMAR Process The AIDA Model

Lack of Awareness

Awareness

Comprehension

Attitude

Action

Attention

Interest

Desire

Action

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