CONSUMER BEHAVIOUR - Alagappa University

B.Sc. (Psychology)VI - Semester

119 63

Directorate of Distance Education

CONSUMER BEHAVIOUR

ALAGAPPA UNIVERSITY[Accredited with ‘A+’ Grade by NAAC (CGPA:3.64) in the Third Cycle

and Graded as Category–I University by MHRD-UGC]

(A State University Established by the Government of Tamil Nadu)

KARAIKUDI – 630 003

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Authors:Arun Kumar, Professor, New Delhi Institute of ManagementN Meenakshi, Associate Professor, NIILM Centre for Management StudiesUnits (1.2-1.4, 1.6, 2, 3, 4.2, 4.4, 5, 6.2.1-6.2.2, 8.3-8.5, 9, 10, 11.3, 12.2.1, 13.2, 13.3, 14.2.3, 14.4)S Sumathi, Marketing ConsultantP Saravanavel, Management ConsultantUnits (1.5, 6.2, 12.2.2, 14.2- 14.2.2, 14.3)Piyali Mukherjee (Banerjee), Civil & Criminal Lawyer, Jangipur Court, West BengalUnits (6.2.3, 6.3, 13.4)Vikas Publishing House, Units (1.0-1.1, 1.7-1.11, 4.0-4.1, 4.3, 4.5-4.9, 6.0-6.1, 6.4-6.8, 7.0-7.1, 7.2, 7.3, 7.4-7.8, 8.0-8.1, 8.2,8.6-8.10, 11.0-11.1, 11.2, 11.4-11.8, 12.0-12.1, 12.2, 12.3-12.7, 13.0-13.1, 13.5-13.9, 14.0-14.1, 14.5-14.9)

Reviewer

Dr AR. Saravanakumar Assistant Professor, Department ofEducation, DDE,Alagappa University,Karaikudi

Work Order No. AU/DDE/DE12-27/Preparation and Printing of Course Materials/2020 Dated 12.08.2020 Copies - 500

SYLLABI-BOOK MAPPING TABLEConsumer Behaviour

BLOCK I: CONCEPT OF CONSUMERSUNIT I: IntroductionDefinition, scope, consumer roles, history of consumer behaviour andthe marketing concept, contributing disciplines and application ofconsumer behaviour.UNIT 2: Market SegmentationMarket segmentation: need, types – geographic, demographic,psychographic and life style. Product positioning: need and strategy.UNIT 3: Consumer MotivationConsumer motivation: needs, goals, motive arousal, reactions tofrustration.UNIT 4: Consumer PersonalityConsumer Personality: nature, influences on consumer behaviour.Consumer Emotions Consumer emotions: nature, uses in advertising.Consumer Perception and its implications.

BLOCK II: CONSUMERS ATTITUDEUNIT 5: Consumer LearningConsumer Learning: Classical and Instrumental theories in the contextof consumer behaviour.UNIT 6: Consumer AttitudeAttitude: functions, Tri-component attitude model and Katz’s models ofattitude and attitude change.UNIT 7: Attitude ChangePost purchase attitude change: cognitive dissonance theory and attributiontheory.UNIT 8: Marketing CommunicationMarketing communication: process, barriers, types of communicationsystems, Source, Message and Medium of Communication.

BLOCK III: SOCIAL CLASS OF CONSUMERSUNIT 9: Consumers In Their Social And Cultural SettingsReference group: Nature, types and influences on consumers. Familylife cycle stages,UNIT-10: Decision MakingNature of household and purchases and family decision making andresolving conflict.UNIT-11: Social ClassSocial class: Nature of social class, symbols of status, concept of moneyand social class, social class categories and consumer behaviour.

Unit 1: Introduction toConsumer Behaviour

(Pages 1-18);Unit 2: Market Segmentation

(Pages 19-36);Unit 3: Consumer

Motivation(Pages 37-48)

Unit 4: Consumer Personality(Pages 49-70);

Unit 5: Consumer Learning(Pages 71-80);

Unit 6: Consumer Attitude(Pages 81-91);

Unit 7: Post Purchase AttitudeChange (Pages 92-100);

Unit 8: MarketingCommunication

(Pages 101-130)

Unit 9: Consumers in theirSocial and Cultural Settings

(Pages 131-144);Unit 10: Decision Making

(Pages 145-153);Unit 11: Social Class

(Pages 154-166)

BLOCK IV: DECISION OF CONSUMERSUNIT- 12: Consumer Decision MakingConsumer decision:Stages in consumer decision process –situational influence, problem recognition,UNIT-13: Purchase and ActionInformation search, evaluation of alternatives and selection, outletselection and purchase and post purchase action.UNIT-14: Organizational BuyerOrganizational Buyer: nature, market structure and pattern of demand,characteristics, decision approach, purchase pattern and organizationalbuyer decision process.

Unit 12: ConsumerDecision Making

(Pages 167-180);Unit 13: Purchase and Action

(Pages 181-190);Unit 14: Organizational buyer

(Pages 191-206)

INTRODUCTION

BLOCK I: CONCEPT OF CONSUMERS

UNIT 1 INTRODUCTION TO CONSUMER BEHAVIOUR 1-181.0 Introduction1.1 Objectives1.2 Definition of Consumer Behaviour1.3 Consumer Roles1.4 History of Consumer Behaviour and the Marketing Concept1.5 Contributing Disciplines1.6 Scope and Application of Consumer Behaviour1.7 Answers to Check Your Progress Questions1.8 Summary1.9 Key Words

1.10 Self Assessment Questions and Exercises1.11 Further Readings

UNIT 2 MARKET SEGMENTATION 19-362.0 Introduction2.1 Objectives2.2 Market Segmentation: Need2.3 Types of Segmentation – Geographic, Demographic, Psychographic and Lifestyle2.4 Product Positioning: Need and Strategy2.5 Answers to Check Your Progress Questions2.6 Summary2.7 Key Words2.8 Self Assessment Questions and Exercises2.9 Further Readings

UNIT 3 CONSUMER MOTIVATION 37-483.0 Introduction3.1 Objectives3.2 Needs, Goals and Motivation

3.2.1 Dynamic Nature of Motivation3.2.2 Defence Mechanisms or Reactions to Frustration3.2.3 Arousal of Motives3.2.4 Theories of Needs and Motivation

3.3 Measurement of Motives and Motivational Research3.4 Answers to Check Your Progress Questions3.5 Summary

CONTENTS

3.6 Key Words3.7 Self Assessment Questions and Exercises3.8 Further Readings

UNIT 4 CONSUMER PERSONALITY 49-704.0 Introduction4.1 Objectives4.2 Consumer Personality: Nature and Influences on Consumer Behaviour4.3 Consumer Emotions: Nature and Uses in Advertising4.4 Consumer Perception and its Implications4.5 Answers to Check Your Progress Questions4.6 Summary4.7 Key Words4.8 Self Assessment Questions and Exercises4.9 Further Readings

BLOCK II: CONSUMERS ATTITUDE

UNIT 5 CONSUMER LEARNING 71-805.0 Introduction5.1 Objectives5.2 Meaning of Consumer Learning5.3 Classical and Instrumental Theories in the Context of Consumer Behaviour5.4 Answers to Check Your Progress Questions5.5 Summary5.6 Key Words5.7 Self Assessment Questions and Exercises5.8 Further Readings

UNIT 6 CONSUMER ATTITUDE 81-916.0 Introduction6.1 Objectives6.2 Meaning of Attitude

6.2.1 Attitude: Functions6.2.2 Tri-Component Attitude Model6.2.3 Katz’s Model of Attitude

6.3 Attitude Change6.4 Answers to Check Your Progress Questions6.5 Summary6.6 Key Words6.7 Self Assessment Questions and Exercises6.8 Further Readings

UNIT 7 POST PURCHASE ATTITUDE CHANGE 92-1007.0 Introduction7.1 Objectives7.2 Cognitive Dissonance Theory7.3 Attribution Theory7.4 Answers to Check Your Progress Questions7.5 Summary7.6 Key Words7.7 Self Assessment Questions and Exercises7.8 Further Readings

UNIT 8 MARKETING COMMUNICATION 101-1308.0 Introduction8.1 Objectives8.2 The Process of Communication

8.2.1 Noises or Barriers to Communication Process8.3 Introduction to Marketing Communication

8.3.1 Types of Marketing Communication8.3.2 Principles of Communication8.3.3 Source, Message and Medium Factors8.3.4 Consumer Behaviour: Perspective and Advertising Response Process

8.4 Information Processing: Attention, Comprehension and Recall8.5 Two-Step Flow of Communication: Opinion Leaders8.6 Answers to Check Your Progress Questions8.7 Summary8.8 Key Words8.9 Self Assessment Questions and Exercises

8.10 Further Readings

BLOCK III: SOCIAL CLASS OF CONSUMERS

UNIT 9 CONSUMERS IN THEIR SOCIAL AND CULTURAL SETTINGS 131-1449.0 Introduction9.1 Objectives9.2 Reference Group: Nature, Types and Influences on Consumers9.3 Family Life Cycle Stages9.4 Answers to Check Your Progress Questions9.5 Summary9.6 Key Words9.7 Self Assessment Questions and Exercises9.8 Further Readings

UNIT 10 DECISION MAKING 145-15310.0 Introduction10.1 Objectives10.2 Nature of Household and Purchases and Family Decision Making and Resolving Conflict10.3 Answers to Check Your Progress Questions10.4 Summary10.5 Key Words10.6 Self Assessment Questions and Exercises10.7 Further Readings

UNIT 11 SOCIAL CLASS 154-16611.0 Introduction11.1 Objectives11.2 Social Class: Nature

11.2.1 Money and Social Class11.2.2 Symbols of Status

11.3 Social Class Categories and Consumer Behaviour11.4 Answers to Check Your Progress Questions11.5 Summary11.6 Key Words11.7 Self Assessment Questions and Exercises11.8 Further Readings

BLOCK IV: DECISION OF CONSUMERS

UNIT 12 CONSUMER DECISION MAKING 167-18012.0 Introduction12.1 Objectives12.2 Stages in Consumer Decision Process – Situational Influence, Problem Recognition

12.2.1 Factors Influencing Buying Decision: Situational Influence, Personal and Social Influence, etc.12.2.2 Problem Recognition

12.3 Answers to Check Your Progress Questions12.4 Summary12.5 Key Words12.6 Self Assessment Questions and Exercises12.7 Further Readings

UNIT 13 PURCHASE AND ACTION 181-19013.0 Introduction13.1 Objectives13.2 Information Search and Evaluation of Alternatives and Selection13.3 Purchase and Post-Purchase Evaluation of Decision13.4 Outlet Selection13.5 Answers to Check Your Progress Questions13.6 Summary

13.7 Key Words13.8 Self Assessment Questions and Exercises13.9 Further Readings

UNIT 14 ORGANIZATIONAL BUYER 191-20614.0 Introduction14.1 Objectives14.2 Meaning and Nature of Organizational Buyer

14.2.1 Market Structure and Pattern of Demand14.2.2 Organizational Buyer vs Final Consumers14.2.3 Characteristics of Organizational Buyers

14.3 Decision Approach and Purchase Pattern14.4 Organizational Buyer Decision Process14.5 Answers to Check Your Progress Questions14.6 Summary14.7 Key Words14.8 Self Assessment Questions and Exercises14.9 Further Readings

Introduction

NOTES

Self-Instructional10 Material

INTRODUCTION

Consumers have needs and wants, and a marketer's objective is to identify theneed and fulfill it. A marketer's ultimate goal is to influence consumer behaviourand convert this into profits for the manufacturer. Businesses that can predictconsumer behaviour will have the edge over their competitors. To predict consumerbehaviour requires knowledge of their values, goals and lifestyle. Companies withthis asset use it to develop better strategies and are better able to win overconsumers.

Consumer behaviour is strongly linked to many factors in a consumer's lifeand to phase they are in, in the lifecycle. Patterns of spending are dictated by whatis happening at a given time in a consumer's life generally. For instance, youngercouples with no children have different needs than those who have started a family,while teenagers and elderly people have more discretionary income and can spendmore freely. Knowing this and other aspects of a target consumer's lifestyle willhelp the marketer to identify the core customer. There is no sense in stocking abusiness with things that only teenagers can afford to consume when customersmay also include young mothers. By using this information to influence buyingdecisions; the retailer or manufacturer can increase sales. There are many moredifferent aspects of consumer behaviour besides these, and a student must beaware of all these.

This book, Consumer Behaviour, has been designed keeping in mind theself-instruction mode (SIM) format and follows a simple pattern, wherein eachunit of the book begins with the Introduction followed by the Objectives for thetopic. The content is then presented in a simple and easy-to-understand mannerand is interspersed with Check Your Progress questions to reinforce the student'sunderstanding of the topic. A list of Self-Assessment Questions and Exercises isalso provided at the end of each unit. The Summary and Key Words further act asuseful tools for students and are meant for effective recapitulation of the text.

NOTES

Self-InstructionalMaterial 1

Introduction toConsumer BehaviourBLOCK - I

CONCEPT OF CONSUMERS

UNIT 1 INTRODUCTION TOCONSUMER BEHAVIOUR

Structure1.0 Introduction1.1 Objectives1.2 Definition of Consumer Behaviour1.3 Consumer Roles1.4 History of Consumer Behaviour and the Marketing Concept1.5 Contributing Disciplines1.6 Scope and Application of Consumer Behaviour1.7 Answers to Check Your Progress Questions1.8 Summary1.9 Key Words

1.10 Self Assessment Questions and Exercises1.11 Further Readings

1.0 INTRODUCTION

All consumers are both unique in themselves and similar to each other. They haveneeds and wants which are varied and diverse from one another; and they havedifferent consumption patterns and consumption behaviour. The marketer helpssatisfy these needs and wants through product and service offerings. For a firm tosurvive, compete and grow, it is essential that the marketer identifies these needsand wants, and provides product offerings more effectively and efficiently thanother competitors. A comprehensive yet meticulous knowledge of consumers andtheir consumption behaviour is essential for a firm to succeed. Herein, lies theessence of Consumer Behaviour, an interdisciplinary subject that emerged as aseparate field of study in the 1960s. Consumer behaviour is the interplay of forcesthat takes place during a consumption process, within a consumers’ self and hisenvironment. Let us study in detail about the concept of consumer behaviour, itssignificance, scope and various disciplines which affect it.

1.1 OBJECTIVES

After going through this unit, you will be able to: Describe the meaning of consumer behaviour and its significance in market Discuss the history of consumer behaviour and marketing concept

Introduction toConsumer Behaviour

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Explain the relevance of market-driven businesses State the disciplines which influence the consumer behaviour Describe the scope and application of consumer behaviour

1.2 DEFINITION OF CONSUMER BEHAVIOUR

Consumer behaviour is defined as the behaviour that consumers display whilesearching for, purchasing, using, evaluating, and disposing of products and servicesthat they expect will satisfy their needs.

Consumer behaviour focuses on how individuals make decisions to spendtheir available resources on consumption-related items. To succeed, businessesneed to know everything they can about consumers. They need to understand thepersonal and group influences that affect consumer decisions and how thesedecisions are made.

The term ‘consumer behaviour’ relates to the two kinds of consumers: theindividual consumer and the organizational consumer. Individuals buy goods andservices for their own use. Such customers are also known as end users or ultimateconsumers. Organizational consumers such as profit and not-for-profit businesses,government agencies, and institutions, all buy products, equipment, and servicesin order to run their organizations.

Segmentation is the process of dividing the market of a product or serviceinto smaller groups of customers. All the customers in one group should (i) buy theproduct for the same purpose, or (ii) use the product in the same way, or (iii) buythe product in the same way. But the customers in one segment should be differentfrom the customers of any other segment in one or more of the above parameters.Segmentation of a market makes sense only when the company has to design aseparate value proposition for each segment.

Sportspersons buy Nike shoes to enhance their performance, whereas thesame shoes are used as casual shoes by some other people. People drive theircars in different ways. Some are ‘rough’ drivers, while others take it easy on theroad. The same grocery items are bought both, at neighbourhood stores and atupscale stores.

You will find that there is enormous variability in the way customers buy anduse products. They may buy the same product but put it to different uses. Somecustomers will buy a product after a lot of consultation, while others will make thepurchase decision of the same product on their own. Some customers will buy aproduct from upscale stores while others will buy the same product from a modeststore close to where they live. Some customers may buy a product that is a reflectionof their social standing while others will buy the product for purely functionalreasons.

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The types of behaviour that different customers demonstrate in buying andusing the same product and the different types of behaviour that the same customerdemonstrates in buying different products elevate marketing to a discipline muchmore intricate than product management. A customer may not behave in the samefashion while buying the same product under different circumstances. By studyingthe behaviour of customers it becomes possible to segment the market in newways and serve them with different marketing mixes even if the product of thevarious marketing mixes may be the same. Alternately, differential offerings forvarious segments can be developed with different marketing mixes.

Therefore, an in-depth analysis and knowledge of customers is a prerequisitefor marketing. Consumer behaviour influences the choice of target markets andthe nature of marketing mix developed to serve it. Important questions to be askedabout customers are:

What are the consumers buying? Who is important in the buying decision? How do they buy? What is their choice criteria? Where do they buy from? When do they buy?

The study of consumer behaviour enables marketers to understand andpredict consumer behaviour in the marketplace; it is concerned not only with whatconsumers buy but also with why, when, where, and how they buy it. Consumerresearch is the methodology used to study consumer behaviour; it takes place atevery phase of the consumption process: before the purchase, during the purchaseand after the purchase.

Consumer behaviour is interdisciplinary; that is, it is based on concepts andtheories about people that have been developed by scientists in diverse disciplines.These disciplines include:

Psychology - The study of the individual: individual determinants in buyingbehaviour

Sociology - The study of groups: group dynamics in buying behaviour Social psychology - The study of how an individual operates in group/groups

and its effects on buying behaviour Cultural Anthropology - The influence of society on the individual: cultural

and cross-cultural issues in buying behaviour Economics - Income and purchasing power

Consumer behaviour has become an integral part of strategic market planning.The belief that ethics and social responsibility should also be integral componentsof every marketing decision is embodied in a revised marketing concept—thesocietal marketing concept—that calls on marketers to fulfill the needs of theirtarget markets in ways that improve society as a whole.


NOTES


Check Your Progress

1. Define consumer behaviour.2. What is segmentation?

1.3 CONSUMER ROLES

When an individual consumer makes a purchase, he unilaterally decides what hewould purchase and how. But, groups like households also make purchases, andin such buying processes, members of the group influence the purchase decision inmany ways, and at different stages in the buying process. Members assume specificroles as the buying process proceeds and they interact actively to make the purchasedecision.

1. Initiator

The person who starts the process of considering a purchase is the initiator, sincehe feels the need for the product. He may also initiate the search for informationabout the purchase decision on his own, or by involving others.

For instance, a teenager may act as an initiator for a motorcycle that hewants for commuting, a housewife may feel the need for a higher capacityrefrigerator, or a busy executive may feel the need for apparel that is comfortableand stylish.

2. Influencer

The influencers attempt to persuade others in the decision-making process toinfluence the outcome of the decision-making process. Influencers gather informationand attempt to impose their choice criteria on the decision. These influencers maybe sought out by the initiator, or may supply relevant information on their own.Influencers may be a part of the reference group of the initiator, experts in theparticular categories, retailers, or other such individuals from whom information issought.

For the teenager, his friends, family members and retailers could act asinfluencers. For the housewife, influencers could be her husband, children, friendsor retailers; and for the executive, influencers can be other colleagues in hisorganization, his contemporaries in other organizations, his friends in other firms,etc. Influencers vary in the extent to which they can change or persuade players inthe decision-making process. The teenager may consider his friends to be moreimportant in suggesting what brands to buy or what features to evaluate beforebuying, more than his parents.

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3. Payer

The payer is the individual with the power or/and financial authority to purchasethe product. The payer is usually presumed to have a large influencing power onthe product purchase as the spending power lies with him.

For the teenager's decision-making process, he could be the payer if he hassufficient money; else some elder in the family can be the payer. In case the payeris his father or an older sibling, he may be more obligated to listen to their suggestionsthan his friends. In the case of the refrigerator buying decision, the husband couldbe the payer. In case of the executive, he himself shells out the payment.

4. Decider

The decider is the person who makes the ultimate choice regarding which productto buy. This may be the initiator or the payer or the user, depending on the dynamicsof the decision-making process. The teenager himself may be the decider, or theultimate decision could be taken by the payer (and the teenager may have tocompromise). In case of the housewife, she could be the decider or the husbandcan be dominant. In both these decisions, much depends on the interplay of thevarious players involved in the decision-making process. The husband and wifecan jointly negotiate which refrigerator to buy if both have an equal say in thebuying process. In case of the executive, he plays multiple roles of being an initiator,payer, decider, buyer and user.

5. Buyer

The buyer conducts the transaction. He visits stores, makes payments and effectsdelivery. Usually, the buyer is the only player whom the marketer can see beinginvolved in the decision-making process.

Merely interviewing him about the purchase does not serve the purpose ofthe marketer who wants to explore the consumer decision-making process, as atthe time of purchase all other evaluations have been completed, which have involvedseveral other players as well. The importance of these players is crucial in decidingthe relevant marketing mixes.

The teenager may purchase the bike alone, with friends or with familymembers. The housewife is likely to purchase the refrigerator from the retailerwith her family, while the busy executive may shop alone or with friends or family.

6. User

He is the actual user/consumer of the product. The user may or may not be theinitiator. The product can be used by an individual, or it may be used by a group.

The teenager and the housewife are the dominant users of the products thatthey have bought, but the products can be used by other members of the family aswell.


NOTES


Check Your Progress

3. What is consumer research?4. Why is it said that consumer behaviour is interdisciplinary in nature?

1.4 HISTORY OF CONSUMER BEHAVIOUR ANDTHE MARKETING CONCEPT

The field of consumer behaviour is rooted in the marketing concept, a businessorientation that evolved in the 1950s through several alternative approaches towardsdoing business, referred to as the production concept, the product concept, andthe selling concept.

The essence of marketing is providing desired value to customers. Acompany cannot possibly satisfy all the customers in a market, because their needsvary. Most organizations do not have the capability to serve widely varying needs.An organization has to select customers whose needs can be matched with itscapability to serve them. If it tries to serve all customers, it is bound to dissatisfy atleast some of them. But if an organization has selected its customers carefully, it ispossible to satisfy all of them completely.

Successful companies rely on their satisfied customers to return to repurchaseand recommend the company’s offerings to others. Therefore, the goal of marketingis attracting and retaining customers through long-term satisfaction of their needs.

It is a far more expensive proposition to attract new customers than toretain existing ones. Building long-term relationships with existing customers byproviding satisfaction to them should be the goal of companies. They attract newcustomers by building expectations and promising to provide value. New customersfind the company’s promise credible, as the company’s existing and erstwhilecustomers vouch for it.

Marketing should be considered a central business function as it establishes,develops, and commercializes long-term customer relationships so that objectivesof both the parties are met. Customer needs are served and the company earnsprofits.

A company exists primarily to serve its customers. Therefore, customersare the most powerful stakeholders of any company. It is the job of the marketerto keep the company’s people, processes, and systems tuned to serving the mostimportant stakeholder of the company. Customer interests must be paramountand should be protected in every decision that a company takes.

Customer needs are discovered and the organization’s processes areorchestrated to serve those needs truthfully. A company practising the marketingconcept achieves corporate goals by meeting its customer needs better than its

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competitors. In a marketing-oriented company, all activities are focused onproviding customer satisfaction. The company understands that the achievementof customer satisfaction is dependent on integrating company-wide efforts.Customer needs should be the focus of the company in all its departments. Decisionsare taken in these departments keeping in mind the impact that the decisions willhave on the customers. The role of marketing is to champion the cause of thecustomer and to orient the whole organization towards serving customer needs.The management must believe that corporate goals can be achieved only throughsatisfied customers.

Marketing is not the sole prerogative and responsibility of the marketingdepartment in an organization. Each department, in fact every employee of anorganization, primarily performs the function of a marketer. His main job is toconvey a consistent image of his organization, whether it is to the internalstakeholders (employees, shareholders), or to the external stakeholders (customers,public). The company should realize that every interaction of any of thesestakeholders with any employee of an organization is decisive for the ultimate fateof the organization.

Marketers need to communicate formally and informally with people in otherdepartments in their organization more often.

For most companies, the marketing department is the first and the mainsource of knowledge about the customer. But when marketers try to share theirinsights with other departments, the information often ends up being ignored ormisunderstood. The problem lies with how often and in what manner the marketingdepartment communicates with other departments in the organization. Marketerswho interact with their non-marketing colleagues fewer than ten times a week tendto have their work undervalued by people in other departments. The reason is thatcontacts fewer than ten times a week–whether formal or informal, spoken or written–means that the marketer has not been in touch enough to learn what information isneeded by others in the company, or how and when it should be presented.Marketing managers who have infrequent contacts with their non-marketingcolleagues do not develop the kind of understanding they need in order to providethe right information at the right time and in the right format.

However, the increased value associated with boosting the frequency ofcommunication begins to level off at about twenty-five times a week. Therefore,marketing managers should strive to communicate between ten and twenty-fivetimes. In fact, marketing managers who communicate with their non-marketingcolleagues more than forty times a week also run the risk of having their workundervalued by other departments. Non-marketing managers often receive a floodof information like daily sales reports by products and markets. They cannot reviewall this data or think about it. A deluge of communication confuses and eventuallyalienates the receiver.


NOTES


All types of communications like individual and group meetings, phone calls,faxes, mails, voice mails, memos and even a chat in the cafeteria are counted. Butthe mix of formal and informal communication matters. A 50-50 mix of formal andinformal communication is optimal for getting the marketers’ message across. Formalcommunication is useful because it is verifiable, and in situations where twodepartments have different styles, a formal procedure for communication can reduceconflict. Informal communication allows people to exchange critical informationunlikely to be found in a real report, such as the ‘real’ reason why a customerdefected. They can also help clarify and give meaning to what is said in moreformal communications. They also give the opportunity to people to ask ‘dumb’questions which they otherwise would not. The spontaneous nature of informalcommunication also does not give participants the time to develop politically-motivated opinions.

Most successful companies today are market-driven and attribute theirsuccess to the importance of meeting the needs of the customer. In more traditionalcompanies, new goods are only produced if it is convenient to do so.

Market-driven companies realize the importance of recognizing thatcustomers continuously compare their products with others available. Internally-driven companies presume that price and performance of the existing product arethe only things that matter to customers. They refuse to believe that differentcustomers can have different concerns. When customer requirements change, theyare jolted because they never understood customer requirements in the first place.

Market-driven businesses recognize that expenditure on marketing researchis an investment that can yield rich rewards through better customer understanding.They base their strategies on the knowledge of customers which is gleaned throughmarket research activities. Market research drives the strategies and operationsof market-driven companies. Internally-driven businesses see marketing researchas a non-productive activity and prefer to rely on anecdotes and received wisdom.Market-driven businesses welcome organizational changes that are bound to occuras an organization moves to maintain strategic fit between varying customerrequirements and its strategies. Internally-oriented companies cherish status quoand resist change.

Market-driven businesses try to understand competitors’ objectives andstrategies, and anticipate competitive actions. They make strategies to countermoves of competitors and when they initiate actions they always featurecompetitors’ probable reactions to them. Internally-driven companies are contentto underplay the competition. They live with the illusion that competitors cannotharm them ever.

Marketing expenditure is regarded as an investment that has long-termconsequences in market-driven businesses. Such companies invest in understandingtheir customers. They invest in building brands based on their understanding of thecustomers. Internally-driven companies view marketing expenditure as superfluous

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that never appears to produce benefits, but the company has to incur it to be onpar with competitors. They believe that customers will buy their products becausethey are superior solutions to their needs. They will not check if their assumptionsabout customers having particular needs are actually felt by the customersthemselves, and whether their products and services are actually useful to them.Reality dawns on them only when their business starts faltering.

In market-oriented companies, those employees who take risks and areinnovative in serving customers in more effective ways are rewarded. Suchcompanies understand that most new products fail, and that there is a reluctanceto punish those people who risk their careers championing a new product idea.Internally-oriented businesses reward timely service, and ability to not makemistakes. They reward people who help in quelling disturbing news from the marketabout customers and competitors. This results in risk avoidance and continuanceof status quo.

Market-driven companies search for latent markets–markets that no othercompany has exploited. Their people, systems, and processes are flexible enoughto sense such markets and design appropriate products and services for them.Internally-driven businesses are happy to stick to their existing products andmarkets. They are not close enough to customers to be able to identify their latentneeds, and their people, systems, and processes are designed to serve only crudelyexpressed needs.

Intensive competition means that companies need to be alert to the dynamicsof customer needs and competitor moves. Market-driven companies are sensitive,fast and flexible so that they are able to respond to changes in the market. Marketing-oriented companies strive for competitive advantage. They seek to serve customersbetter than their competition. Internally-oriented companies are happy to produce‘me-too’ copies of offerings already in the market.

Commitments by marketers impact both the company and the customer.For the company they indicate the promise of delivery of its offering, while for thecustomer, they shape expectations. Commitments must consider the short-termand long-term impact on both the concerned stakeholders and the company.

Despite differences in their personal attributes, behaviours and styles,successful marketers excel in making, honouring and remaking commitments tocustomers. Marketing commitments can take many forms which include installingspecial machines, serving customer requirements, delivering an item at a particulartime, positioning the product, and public statements. These commitments exertboth an immediate and enduring influence on the company. A commitment to deliveran item sooner than it is normally done exerts pressure on the production systemof the company. When a company positions its offering, it implicitly chooses onemarket over another. When a company selects a target market, it is willing toforego important segments that may emerge in the future.


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As mentioned above, when a marketer makes a commitment, it affects twodistinct constituents: customers and the company of the marketer. The marketerhas to anticipate the consequences of his commitments for both the constituents,both in the short term and long term. In a market where buying criteria is still beingestablished, it may be fatal to position the company’s offering very narrowly.Selecting a celebrity to spearhead the marketing campaign of the company hasconsequences both for the short-term and long-term.

The idea is that commitments made by marketers bind the company in aparticular way for some time in the future. Marketers should be able to thinkthrough these consequences. But when marketers find that their commitments areholding the company back, they should replace the old commitments with freshones. Customers understand that commitments implicitly have some conditionsattached to them and when conditions change dramatically, an old commitmentshould be replaced by a more rejuvenating one. Commitments should not bind thecompany in a manner that compromises its very survival. It is not as if the companyis going back on its commitment, it is just that an antiquated commitment is beingreplaced by a fresh one, which is reflecting current realities.

Check Your Progress

5. What is the goal of marketing?6. What does an intensive competition mean to the companies?

1.5 CONTRIBUTING DISCIPLINES

Consumers vary tremendously in their ages, income, education level, mobilitypattern and tastes and preferences. Around two decades ago it was argued thatEconomics was marketing’s “Mother” discipline. This was because it was seenthat consumer purchase decision is governed by their economic and mental forces.Mental forces like fear, pride, fashion possessions, sex or romance, vanity etc.,create desires and wants in the minds of the consumers, but economic forces suchas purchasing power may come in the way of satisfying those wants hence theconsumer has to choose between those wants and select the products accordingto the priority of consumption. However, the rapid changes taking place in theexternal environment, has also had a bearing on the consumer behaviour and isseen in the complex manner in which a consumer behaves. Researches in this fieldhave shown that the light that has been shed on the human behaviour can in general,by the behavioural science, be extended to the study of the behaviour exhibited byindividuals in their roles as buyers / consumers. So consumer behaviour can besaid to be the melding of all those bodies of knowledge concerning with humanbehaviour – behavioural science.

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To facilitate better understanding of the interdisciplinary dimension ofconsumer behaviour, concepts have been borrowed from the other scientificdisciplines and these have a bearing on the consumer behaviour as given hereunder:

Table 1.1 Various disciplines having influenceon the consumer behaviour

Sr. Discipline Comprising of or governed ByNo.1. Economics Demand, Supply, Income, Purchasing Power.2. Psychology Needs & Motivation, Personality Perception, Learning,

Attitudes.3. Sociology Society, Social Class, Power, Esteem, Status.4. Socio Psychology Group Behaviour, Conformity to group norms, Group

influences, Role leader.5. Cultural Anthropology Values, Belief, Caste systems, Attitude

towards wealth, Joint family system.

Economics and commerce: The study of consumers is an important part of thestudy of economics and commerce. How the consumers spend their funds, howthey evaluate alternatives, how they make decisions to optimise satisfaction. Earlytheories relating to consumer behaviour were based on theory of economics.Consumer is an economic man. It means, consumer is one who makes a rationaldecision. The theory of economic man contributes rationally to maximise benefitsin the purchase of goods and services. However, the social scientists opined thatconsumers operate in an imperfect world they do not reap their decisions in termsof such economic considerations such as price, quality, relationship, marginal utility.Indeed, they are often unwilling to engage in extensive decision–making activities;instead settle for a satisfactory decision.Sociology: The study of human group is referred sociology. Group behaviour(i.e., actions on individuals in group) often differs from the actions of individualsalone. The influence of group, family structures, social class on consumers behaviourare essentially relevant to the study of consumer behaviour in the marketplace.Psychology: The study of psychology covers motivation, perception, attitudes,personality, learning patterns of individuals which are primary issues to understandconsumer behaviour as well as to understand the various consumption needs ofthem. Further, their actions and reactions in response to different products andproduct messages are well within psychology subject.Social Psychology (How an individual operates in a group): The buyerliving in a social environment, is influenced by it and in turn influences its course ofdevelopment. On account of this he is a member of several groups / organisationsat the same time. He is a member of a family, he works with a certain organisation,he may be a member of a professional body, he may an active member of acultural body. There is constant interaction between the individual and all the


NOTES


organisations of which he is member. And all these interactions leave some imprinton his mind, influencing him in his day to day life and consequently, his buyingbehaviour.

Thus people who are aware of each other, their needs & goals values,belief and norms will dynamically interact with each other and perceive others asmembers of the group. David Krech, Richmond S. Crutch Field, and Egetton L.Ballachey have defined group as (1) persons who are interdependent upon eachother such that each member’s behaviour potentially influences the behaviour ofeach of the others and (2) The sharing of an ideology a set of beliefs values andnorms which regulates their mutual conduct. A group may fulfill different needs forvarious individuals. Each group exerts on the individual a variety of influences,pressures to conform and act as forces that guide his behaviour.Cultural anthropology: The study of human beings in the society refers to culturalanthropology. It traces beliefs, values, customs which passed down to individualsfrom their parents and influence their consumption behaviour. It also refers to sub-cultures and tends to a comparison of consumers of different nationalities withdiverse cultures as well as customs.

Thus, the nature of consumer behaviour is inter-disciplinary. Perhaps, thisbehaviour is the greatest strength, serves to integrate existing knowledge into acomprehensive body of information about individuals in their consumption roles.Though, the study of consumer behaviour is of recent origin, it has emerged longback of research by scientists specialising in the study of human behaviour. Beginningwith borrowed concept, the consumer behaviour has grown vertically as well ashorizontally. The field of consumer behaviour has now become a full–fledgeddiscipline on its own, buttressed by a growing meaningful research.

The interdisciplinary nature of consumer behaviour serves to integrate existingknowledge from other fields into a comprehensive body of information aboutindividuals in their consumption roles. Since its beginning as a “borrowed” science,the field of consumer behaviour has grown enormously and has become thebackbone of most marketing study progrmmes. Consumer research to each variablein the marketing mix: (a) Product. Consumer research enables the marketer tobuild consumer “meaning” into the product by discovering which attributes aremore important to the target consumers and integrating them into the design of theproduct. (b) Price. Consumer research assists the marketer in establishingpsychological pricing levels that consumers would be willing to pat. (c) Place ordistribution. Consumer research identifies where consumers shop and how theyperceive various distribution outlets, and provides the basis for an effectivedistribution strategy. (d) Promotions. Consumer research is used to determinepersuasive advertising appeals and to identify appropriate media choices to reachthe selected target markets.

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Check Your Progress

7. Mention the issues covered under the study of psychology cover.8. What is cultural anthropology?

1.6 SCOPE AND APPLICATION OF CONSUMERBEHAVIOUR

The scope of consumer behaviour is based on how individuals make decisions.Consumer behaviour is rooted deep in the marketing concept, which is also knownas production concept, product concept and selling concept.

The term consumer behaviour, generally, describes two diverse kinds ofconsuming entities: the personal consumer and the organizational consumer. Thepersonal consumers are those who use goods and services for their own use or forthe household requirements or as gifts. The end users or ultimate consumers arethe ones who buy products for final use. The organizational consumer, however,includes profit-making and non-profit businesses, government agencies andinstitutions and all those who buy products, equipment and services to run theirorganizations.

Consumer behaviour is interdisciplinary; that is, it is based on concepts andtheories in diverse disciplines as psychology, sociology, social psychology, culturalanthropology and economics.

A need is a lack within a person that must be filled. A motive is known as aninternal push that causes a person to act. Motives are based on needs. Businessesprefer to transform consumer needs and wants into buying motives. This is becausea buying motive pushes a consumer to look for a product.

Consumer behaviour has become an integral part of strategic market planning.The belief that ethics and social responsibility should also be integral componentsof every marketing decision is embodied in a revised marketing concept, which isthe societal marketing concept. This concept calls on marketers to fulfil the needsof their target markets in ways that improve society as a whole.

Consumer research

For adopting marketing orientation, the knowledge of customers and other aspectsof the marketing environment that affect the company’s operations is a prerequisite.The emphasis while marketing is on identification and satisfaction of consumerneeds. In order to determine customer needs and to implement marketing strategiesand programmes aimed at satisfying those needs, marketing managers needinformation. Questions like what kind of people buy the company’s products,how much value they give to the products and where they buy the products fromare important and should be answered.


NOTES


The field of consumer research has been developed as an extension to thefield of marketing research. The findings of consumer research enable a companyto understand the behaviour of consumers in the marketplace. Marketers are ableto understand various aspects of consumer behaviour, such as motivations behindconsumer purchases, cultural nuances of consumers, brand awareness, brand imageperceptions, decision-making process for a product, exposure and reactions topromotions, new product introductions. These enable the marketer to design moresuitable marketing strategies for its target consumers.

In recent times, many factors have contributed to increasing the need formore and improved information. As firms have become national and internationalin scope, the need for information of larger and more distant markets has increased.As consumers have become more affluent and sophisticated, marketing managersneed better information on how they will react to products and other marketingofferings. As competition becomes more intense, managers need informationregarding effectiveness of the marketing tools they use. As the environment ischanging more rapidly, marketing managers also need timely information.

It can be dangerous for a firm to rely only on a manager’s interval views.The company needs to find out the real views of the customer and then onlyshould it design its marketing initiatives. This information is obtained by formal andinformal means. As the customer base grows, informal means like casual discussionswith customers, reports of salespeople, observation of competitor activities areinsufficient for providing the needed in-depth market knowledge. A more formalapproach like collection of data through questionnaires must be applied for asystematic supply of information to managers.

But it is becoming increasingly difficult to collect data about customer needs,behaviour and satisfaction through structured methods like questionnaires.Companies have enhanced the performance and quality of their products to theextent that most customers are ostensibly happy with the products they are using.And they say so in their interviews with researchers. In any case, if anything usefulis reported in questionnaires and interviews, such data is of no use as companiesalready have it because of the easy availability of such matter. Sustainabledifferentiation has to be built based on customer information which is not easy toobtain and so every company cannot have such data. Such customer informationis revealed by the frustrations and joys that a customer experiences when he/she isusing the product. These emotions are too subtle to be captured in words. Customershave to be observed in their natural settings to know their emotions. These emotionscan form the basis for differentiation. Thus, marketing research has to move beyondits current methods.

Strategic planning

Strategic planning entails setting up an approach that a company decides to followover a defined period of time. It can be for a specific part or department of the

NOTES



business, like planning a marketing strategy, or for the business as a whole. Usuallyan overall strategy for the business is worked upon by the senior employees of thecompany and then the distinct departments plan their strategy in alignment with theoverall strategy. Differing businesses use various time periods for their strategicplanning. The time period is usually dependent on how fast that particular industryis moving. For example, in a fast-changing environment like the Internet, a five-year plan would not work. In industries that change more slowly, longer rangeplanning is possible and desirable.

Without a strategy, there will be no direction. Strategy tells you where youwant to go. Without any strategy, the final results may not be what you desire. Infact, without a strategy, your chance of achieving your goals is diminished.

Though strategic planning shouldn’t be all that you do in your business, itshould be an integral part of it. Every action should be in alignment with yourstrategy. Also, each employee should know the strategy so that he can contributehis best in making it happen. However, no strategy should be set in stone. It shouldbe revisited and revised at regular intervals.

Check Your Progress

9. Define need in relation to consumer behaviour.10. What is strategic planning?

1.7 ANSWERS TO CHECK YOUR PROGRESSQUESTIONS

1. Consumer behaviour is defined as the behaviour that consumers displaywhile searching for, purchasing, using, evaluating, and disposing of productsand services that they expect will satisfy their needs.

2. Segmentation is the process of dividing the market of a product or serviceinto smaller groups of customers.

3. Consumer research is the methodology used to study consumer behaviour;it takes place at every phase of the consumption process: before the purchase,during the purchase and after the purchase.

4. Consumer behaviour is interdisciplinary; that is, it is based on concepts andtheories about people that have been developed by scientists in diversedisciplines.

5. The goal of marketing is attracting and retaining customers through long-term satisfaction of their needs.

6. Intensive competition means that companies need to be alert to the dynamicsof customer needs and competitor moves.


NOTES


7. The study of psychology covers motivation, perception, attitudes, personalityand learning patterns of individuals.

8. Cultural anthropology is the study of human beings in the society.9. A need is a lack within a person that must be filled.

10. Strategic planning entails setting up an approach that a company decides tofollow over a defined period of time.

1.8 SUMMARY

The term ‘consumer behaviour’ relates to the two kinds of consumers: theindividual consumer and the organizational consumer. Individuals buy goodsand services for their own use. Such customers are also known as endusers or ultimate consumers. Organizational consumers such as profit andnot-for-profit businesses, government agencies, and institutions, all buyproducts, equipment, and services in order to run their organizations.

By studying the behaviour of customers it becomes possible to segment themarket in new ways and serve them with different marketing mixes even ifthe product of the various marketing mixes may be the same.

The types of behaviour that different customers demonstrate in buying andusing the same product and the different types of behaviour that the samecustomer demonstrates in buying different products elevate marketing to adiscipline much more intricate than product management.

The study of consumer behaviour enables marketers to understand andpredict consumer behaviour in the marketplace. Consumer research is themethodology used to study consumer behaviour; it takes place at everyphase of the consumption process: before the purchase, during the purchaseand after the purchase.

Consumer behaviour is interdisciplinary; that is, it is based on concepts andtheories about people that have been developed by scientists in diversedisciplines. These disciplines include: psychology, sociology, socialpsychology, cultural anthropology, and economics.

The essence of marketing is providing desired value to customers. The role of marketing is to champion the cause of the customer and to

orient the whole organization towards serving customer needs. Themanagement must believe that corporate goals can be achieved only throughsatisfied customers.

Internally-driven businesses see marketing research as a non-productiveactivity and prefer to rely on anecdotes and received wisdom. Market-driven businesses welcome organizational changes that are bound to occuras an organization moves to maintain strategic fit between varying customer

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requirements and its strategies. Internally-oriented companies cherish statusquo and resist change.

The study of psychology covers motivation, perception, attitudes, personality,learning patterns of individuals which are primary issues to understandconsumer behaviour as well as to understand the various consumption needsof them.

David Krech, Richmond S. Crutch Field, and Egetton L. Ballachey havedefined group as (1) persons who are interdependent upon each other suchthat each member’s behaviour potentially influences the behaviour of eachof the others and (2) The sharing of an ideology a set of beliefs values andnorms which regulates their mutual conduct.

The interdisciplinary nature of consumer behaviour serves to integrate existingknowledge from other fields into a comprehensive body of information aboutindividuals in their consumption roles.

Consumer behaviour has become an integral part of strategic marketplanning. The belief that ethics and social responsibility should also be integralcomponents of every marketing decision is embodied in a revised marketingconcept, which is the societal marketing concept. This concept calls onmarketers to fulfil the needs of their target markets in ways that improvesociety as a whole.

The field of consumer research has been developed as an extension to thefield of marketing research. The findings of consumer research enable acompany to understand the behaviour of consumers in the marketplace.

It can be dangerous for a firm to rely only on a manager’s interval views.The company needs to find out the real views of the customer and then onlyshould it design its marketing initiatives.

A more formal approach like collection of data through questionnaires mustbe applied for a systematic supply of information to managers.

1.9 KEY WORDS

Consumer behaviour: It is the study of individuals, groups, or organizationsand all the activities associated with the purchase, use and disposal of goodsand services, and how the consumer’s emotions, attitudes and preferencesaffect buying behaviour.

Marketer: It is a person or company that advertises or promotes something. Market-driven business: It is the business which is influenced by market

knowledge and customer needs. Strategic planning: It is an organization’s process of defining its strategy,

or direction, and making decisions on allocating its resources to pursue thisstrategy.


NOTES


1.10 SELF ASSESSMENT QUESTIONS ANDEXERCISES

Short-Answer Questions

1. List some important questions to be asked about consumers.2. Which disciplines are included in the study of consumer behaviour?3. Write a short note on the impact of commitments by marketers.

Long-Answer Questions

1. Discuss the contributing disciplines when it comes to consumer behaviour.2. Describe the role of a marketer in consumer behaviour study and in devising

marketing concept.

1.11 FURTHER READINGS

Saravanavel, P and S Sumathi. 2004. Marketing Research and ConsumerBehaviour. New Delhi: Vikas Publishing House.

Kumar, Arun and N Meenakshi. 2016. Marketing Management. New Delhi:Vikas Publishing House.

Kumar, A, K Singh. 2013. Consumer Behaviour and MarketingCommunication: An Indian Perspective, 1st Edition. New Delhi:Dreamtech Press.

Schiffman LG, LL Kanuk. 2007. Consumer Behaviour, 9th Edition. New Delhi:Prentice-Hall of India Pvt Ltd.

Batra Satish K, S.H.H. Kazmi. 2004. Consumer Behaviour – Text and Cases.New Delhi: Excel Books.

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Market Segmentation

UNIT 2 MARKET SEGMENTATIONStructure

2.0 Introduction2.1 Objectives2.2 Market Segmentation: Need2.3 Types of Segmentation – Geographic, Demographic, Psychographic and

Lifestyle2.4 Product Positioning: Need and Strategy2.5 Answers to Check Your Progress Questions2.6 Summary2.7 Key Words2.8 Self Assessment Questions and Exercises2.9 Further Readings

2.0 INTRODUCTION

Market segmentation is based on the assumption that customers are unique. Theyhave different needs, wants and preferences. There do exist diverse customergroups homogenous on certain bases within, but heterogeneous among each other.So, instead of a single standardized product offering, the product and serviceofferings need to be designed according to the needs and wants of the segment soas to satisfy them better. The marketer’s assumption is that because of thehomogeneity that exists within the members of the group, they would react similarlytowards a product and service offering and behave likewise to a correspondingmarketing program. It involves identifying distinct groups of buyers who arehomogenous within but heterogeneous between each other. Targeting involvesevaluating the viability of each segment, and then selecting one or few marketsegments to serve better and in a superior way. Positioning involves creating animage in the minds of the target market about the product and service offering; thisimage should relate to the need/want as well as portray uniqueness and/orsuperiority than other competitive offerings. This unit deals with the concept ofsegmentation and its types and the product repositioning. Let us study these indetail.

2.1 OBJECTIVES

After going through this unit, you will be able to: Describe the meaning of segmentation and its need in consumer research Explain the types of segmentation Discuss the concept, need and strategies of product positioning

Market Segmentation

NOTES


2.2 MARKET SEGMENTATION: NEED

Different product and service offerings must be made to the diverse groups thattypically comprise a market. Segmentation involves identification of groups ofindividuals or organizations that have significant implications for the determinationof a marketing strategy. Segmentation refers to the division of a diverse marketinto a number of smaller, more similar sub-markets. The objective is to identifygroups of customers with similar requirements so that they can be served effectivelywhile being of a sufficient size for the product to be supplied efficiently. It is thebasis by which marketers understand their markets and develop strategies forserving their chosen customers better than competition.

Target market selection

Segmentation provides the basis for the selection of target markets. A target marketis a chosen segment of market which a company decides to serve. Customers inthe target market have similar characteristics and a single marketing mix can beused to serve them. Creative segmentation may result in the identification of newsegments that are not being served presently and may form attractive targets.

Tailored marketing mix

Segmentation allows the grouping of customers based on similarities (similarbenefits). Marketers are able to understand in depth the requirements of segmentsand tailor a marketing mix that meets their needs. Segmentation promotes the ideaof customer satisfaction by viewing markets as diverse sets of needs which mustbe understood and met by the suppliers.

Differentiation

By breaking a market into its constituent segments, a company may differentiateits offerings between segments, and within each segment it can differentiate itsoffering from its competitor. By creating a differential advantage over thecompetition, the company gives the customer a reason to buy from it rather thanfrom its competitors.

Opportunities and threats

Markets are rarely static. As customers become more affluent, they seek newexperiences and develop new values, and new segments emerge. The companymay spot a new underserved market segment and meet its needs better thancompetition. Similarly, the neglect of a market segment can pose a threat ifcompetition uses it as a gateway to market entry. Market segments may need tobe protected by existing competitors even though it may not be profitable to servethem. They do this because they fear that the market segments they vacate mightbe used by new entrants to establish a foothold in the market.

NOTES


Market Segmentation

Check Your Progress

1. Define segmentation.2. What is a target market?

2.3 TYPES OF SEGMENTATION – GEOGRAPHIC,DEMOGRAPHIC, PSYCHOGRAPHIC ANDLIFESTYLE

Markets can be segmented in many ways. Segmentation variables are the criteriathat are used for dividing a market into segments. The chosen criteria should be agood predictor of differences in buyer behaviour. There are three broad groups ofconsumer segmentation criteria: Behavioural, psychographic and profile variables.

Behavioural variables such as benefits sought from the product, and buyingpatterns such as frequency and volume of purchase, may be considered thefundamental basis.

Psychographic variables are used when the purchasing behaviour iscorrelated with the personality or lifestyle of consumers. Consumers withdifferent personalities or lifestyles have varying product preferences andmay respond differently to marketing mix offerings.

Profiling is not essentially a criterion for segmentation. After finding thesedifferences, marketers need to describe the people who exhibit them. Profilevariables such as socio-economic group or geographic locations are valuablein describing the customers of the identified segment. For instance, a marketermay want to find out whether there are groups of people who value lowcalories in soft drinks. After tracing such people, the marketer attempts toprofile them in terms of their age and socio-economic groupings. Theobjective of profiling is to identify and locate the customers so that they canbe approached by the marketers.But in practice, segmentation may not follow this logical sequence. Often,

profile variables will be identified first and then the segments so described will beexamined to see if they show different behavioural responses. For instance, differentage or income groups may be examined to see if they show different attitudes andrequirements. Also, note many authors classify the types of segmentation differentlytoo.

(i) Behavioural segmentation

People may seek different benefits from a product. Benefits sought in the fruitdrink market are extra energy, vitamins, being natural, low calories and low price.There are brands targeting each segment. Benefit segmentation provides anunderstanding on why people buy in a market and aids in the identification of

Market Segmentation

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opportunities, as some of the benefits that customers seek may not be providedby the existing companies.

Benefit segmentation is fundamental because the objective of marketing isto provide customers with benefits which they value. Profile analysis can then beperformed to identify the types of people (age, gender) in each benefit segment sothat targeting becomes easier.

Purchase occasion

Products like tyres may be purchased as a result of an emergency or as a routinebuy. Price sensitivity is likely to be lower when products are bought in emergencysituations. Some products may be bought as gifts or self purchases. Gift marketsare concentrated during festivals, while the advertising budget for these will beconcentrated in the pre- festival period. Package designs may differ during thisperiod, and special offers may also be made.

Purchase behaviour

Differences in purchase behaviour can be based on the time of purchase relativeto the launch of the product or on the patterns of purchase. When a new productis launched, a key task is to identify the innovator segment of the market. Thesepeople allow communication to be specifically targeted at them. Innovators aremore likely to be willing to buy products soon after the launch. Other segments ofthe market may need more time to assess the benefits and delay purchase untilafter the innovators have taken the early risks of purchase.

Brand loyalty

The degree of brand loyalty can be the basis for segmenting customers. Somebuyers are totally brand loyal, buying only one brand in a product group. Mostbuyers switch brands. Some may buy one particular brand on most occasions butmay also buy two or three other brands. Others might show no loyalty to anyindividual brand but switch brands on the basis of special offers to buy. This isbecause they are variety seekers who look to buy a different brand each time. Byprofiling the characteristics of each group a company can target each segmentaccordingly. By knowing the type of person (for instance, by age, socio-economicgroup) who is brand loyal, a company can channel persuasive appeals to defendthis segment. By knowing the characteristics and shopping habits of offer seekers,sales promotions can be correctly targeted. In the consumer durables market,customers can be divided into first-time buyers, replacement buyers and switchersfrom other brands.

Usage

Consumers can be segmented on the basis of heavy users, light users and non-users of a product category. Profiling of heavy users allows this group to receive

NOTES


Market Segmentationthe most marketing attention because creating brand loyalty among these peoplewill pay heavy dividends. Attacking the heavy user segment (20 per cent customersconsuming 80 per cent of the product) can have drawbacks if all competitorsfollow this strategy. Analysing the light and non-user category provides insightsthat permit the development of appeals that are not mimicked by competitors asthey will concentrate on the heavy users.

Perceptions and beliefs

Perceptions and beliefs are strongly linked to behaviour. Consumers are groupedby identifying those people who view the products in a market in a similar way(perceptual segmentation) and have similar beliefs (belief segmentation). Forinstance, when it was launched, a product such as an iPod byApple made moresense to consumers who were passionate about music and also heldextremelypositive perceptions about the use of the technology.

In the early 1990s, several Indian consumers held negative perceptionsabout microwaves. It was believed that Indian food rich in oil and spices could notbe cooked in microwaves, and the waves emanating inside were harmful tohealth.Another segment that was more open to adopting microwaves consisted ofthose consumers who were well aware of the functioning of the microwave, andwere health conscious. They also sought the convenience of faster cooking, andcooking other types of cuisines. For these purposes, a microwave was found tobe suitable by them. Therefore, marketers initially focused on the second segment.

(ii) Psychographic segmentation: Lifestyle and Personality

Lifestyle

A company groups people according to their way of living as reflected in theiractivities, interests and opinions. The company identifies groups of people withsimilar patterns of living. The question that arises in this type of segmentation iswhether general lifestyle patterns are predictive of purchasing behaviour in specificmarkets. The company will relate a brand to a particular lifestyle.

Personality

In some product categories, there is a relationship between the brand personalityand the personality of the buyer. Buyer and brand personalities are likely to matchwhere the brand choice is a direct manifestation of personal values, but for mostFMCG goods, people buy a repertoire of goods. Personality and lifestylesegmentation will work best when brand choice is a reflection of self-expression,i.e., the brand becomes a badge which makes public an aspect of personality.Successful personality-based segmentation is found in categories such as cosmetics,alcoholic drinks and cigarettes.

Market Segmentation

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(iii) Profile segmentation: Demographic, Socio-Economic andGeographic Variables

Even if behaviour and/or psychographic segmentation distinguishes between buyerpreferences, there is need to analyse the resulting segments in terms of profilevariables such as age and socio-economic groups. The segments emerging frombehavioural and psychographic segmentation will have to be profiled in terms ofage, occupation, socio- economic status, place of residence, gender, etc. Profilingwill help companies in identifying the segments and focusing their attention on them.

Demographic variables

Age—Age is used to segment many consumer markets, like food and clothing.Gender—Differing tastes and customs between men and women are reflected inspecialist products aimed at these market segments.Life cycle—Disposable income and purchase requirements vary according tothe life cycle stage (young singles versus married). Young couples without childrenmay be a prime target for consumer durables. The use of life cycle analysis givesa better precision in segmenting markets than age, because family responsibilitiesand the presence of children have a greater bearing on what people buy.

Socioeconomic variables

Social class as a predictor of buyer behaviour has been open to question. Manypeople who have similar occupations have dissimilar lifestyles and purchasingpatterns.

Educational qualification and income are also used as variables forsegmentation.

Geographic variables

A marketer can use pure geographic segmentation or a hybrid of geographic anddemographic variables to segment the market.

Geographic segmentation is useful when there are geographic differences inconsumption patterns and preferences. Variations in food preferences may formthe basis of geographic segmentation.

Both the geographic and demographic variables help a marketer to point totheir segments more precisely.

Combining segmentation variables

Often, a combination of variables will be used to identify groups of consumersresponding in the same way to marketing mix strategies. For instance, life cycle,occupation and income can be combined. Flexibility and creativity are hallmarksof effective segmentation analysis.

NOTES


Market SegmentationLife Style

Demographic variables help marketers locate their target market and psychographicvariables provide the marketer with more insight about the segment. Psychographicsis, in common parlance, lifestyle analysis or AIO research. In its most widelypractised form, a psychographic study consists of a long list of statements designedto capture relevant aspects of a consumer, like personality, hinting motives, interests,attitudes, beliefs and values. When the study becomes oriented towards a particularproduct, the consumers have to respond to statements which are selected for thepurpose i.e. on products, brands, services, competitive situations etc.

The demographic and psychographic lifestyle approaches are highlycomplementary and work best together. People hailing from the same sub-culture,social class and even occupation follow quite different lifestyles. If we can createa fictitious Mrs. Mathur to look at possibly it may be like this: She may choose tolive a "belonging" lifestyle which will be reflected in her wearing conservative clothes,spending considerable time with her family and participating in social activities. Orshe can be an "achiever" marked by an active personal life and playing hard whenit comes to travel and sports. It can be seen that lifestyle depicts the "whole person"in active interaction with his environment.

The lifestyle analysis adds a great amount of understanding to a typicaldemographic description. A person buying a new designer shirt may be 34 yearsold, married and living in a three bedroom house and having 2 children. The lifestyleanalysis would help marketers to paint a more human portrait to their target market.

For instance, the "young, upwardly mobile" lifestyle group cutting acrosssub-cultures, social class, occupation etc. is now being increasingly used by Indianmarketers as their market group. This finds its expression in advertising appeals"He loves the feel of the city... The skyscrapers... The crowds... The pretty faces...And the heedy feeling of being successful... Above all the freedom of being himself."So says the advertisement for Pantaloon cotton trousers from Manz Wear. Anotheradvertisement for men's underwear from Bhilwara loudly announces "for the manwho plays many roles-here comes the very best in wearunders via the grand fashionavenues of Paris...Champs Elise". The behavioural differences between prospectsthat do not show up in demographic figures come alive in lifestyle patterns. Lifestyle,analysis leads to more comprehensive and penetrating profiles of how consumersthink and act than may be available from other approaches.

Characteristics of Lifestyle

Feldman and Theilbar describe lifestyle by the following characteristics:

1. Lifestyle is a group phenomenon

A person's lifestyle bears the influence of his/her participation in social groups andof his/her relationships with others. Two clerks in the same office may exhibitdifferent lifestyles.

Market Segmentation

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2. Lifestyle pervades various aspects of life

An individual's lifestyle may result in certain consistency of behaviour. Knowing aperson's conduct in one aspect of life may enable us to predict how he/she maybehave in other areas.

3. Lifestyle implies a central life interest

For every individual there are many central life interests like family, work, leisure,sexual exploits, religion, politics etc. that may fashion his interaction with theenvironment.

4. Lifestyles vary according to sociologically relevant variables

The rate of social change in a society has a great deal to do with variations inlifestyles. So do age, sex, religion, ethnicity and social class. The increase in thenumber of double income families and that of working women have resulted incompletely different lifestyles in the 1980's in India.

Influences on Lifestyle

Cultural and societal variables establish the outer boundaries of lifestyle specific toour culture. The interaction of group and individual expectations and values createsa systematic pattern of behaviour. This is the lifestyle pattern that determinespurchase decisions. When goods and services available in the market are in tunewith lifestyle patterns and values, consumer market reactions are favourable. Andpurchases that reinforce these patterns further illuminate these lifestyles. Lazer'slifestyle hierarchy brings out these interactions.

Fig. 2.1 Hierarchy of Influences on Lifestyles

NOTES


Market Segmentation

Check Your Progress

3. What are three broad groups of consumer segmentation?4. What is psychographics?5. When are consumer market reactions favourable?

2.4 PRODUCT POSITIONING: NEED ANDSTRATEGIES

A company’s offer has to be distinct from those of its competitors and should fulfilthe requirements of the customers of its target markets. A company’s positioning isthe result of whatever the company does. Marketing mix is the most tangible andthe most flexible tool to create the desired positioning. Companies use theirmarketing mix to create something specific and special for their customers.

1. Product differentiation

Product differentiation results from added features which give customers benefitsthat rivals cannot match. Before adding features, a company should thoroughlyresearch the need for the particular feature among customers in the intended targetmarket. Companies keep on adding new features just because their competitorsare offering them. Sometimes deletion of features and benefits from a product maybe a very effective differentiation because customers never really wanted thesebenefits.

Adding the same features as competitors may make the products of acompany more acceptable among customers, though it may end up introducingsimilar products that does not result in any differential advantage. Such a strategyof matching features and benefits will result in product parity, with no companyproviding any compelling reasons to the customer for buying its product. In suchindustries, customers will buy on the basis of price, and competitors will be forcedto cut prices to grab customers from each other. The profit of every company willgo down. Companies will not have the ability to differentiate their product as theywill not have enough resources due to their dwindling profit margins. The only wayout of this mess is that companies should pick up courage, arrange resources andstart differentiating their products from each other. Price based competition shouldbe avoided.

Most of the time, in most categories of goods, consumers get products withfeatures that they could do without and are needlessly paying for them. Mostproducts can be made more suitable for their target markets by deletion of certainfeatures. Nokia has introduced a stripped down version of the cellular phone forthe entry level customer in India. The phone is a contrast to the ones that offerInternet usage, m-commerce, camera, etc. It serves the basic purpose of mobile

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connectivity. Many customers are realizing that they do not need what they havebought and are switching over to these simpler phones. This phenomenon is likelyto be repeated in many categories of goods once simpler options are available atlesser prices.

2. Promotional differentiation

Promotional differentiation arises from unique, valued images created by advertisingor superior services provided by salespeople. People in different target marketsare likely to react differently to certain stimuli like emotions, images, storylines,celebrities, etc. It is important to identify the stimuli which will evoke the desiredresponse in members of the target market. It may be an extremely intricate taskbut it is imperative to find out whether the members prefer emotional or rationalmessages, whether they like humourous or sedate messages, whether they likenarratives or musicals, etc. Unless the company has determined the choice of theconsumers on all the variables that affect an advertisement, it cannot create anadvertisement which is suitable for members of the target market but is unsuitablefor any other target market. Sadly most advertisements look and sound similarand are not suitable for any particular target market and do not elicit the desiredresponse.

Similarly different target markets will require different types of salespresentations, persuasions and relationships with the seller.

3. Distribution differentiation

Distribution differentiation arises by making the buy situation more convenient forcustomers. Different target markets will require different activities to make thebuying situation more convenient for them. Customers hard pressed for time havewelcomed introduction of automated teller machines. But some customers wouldstill prefer to visit the bank to conduct transactions which can easily be carried outthrough the ATMs. Cans of carbonated soft drinks from vending machines arefinding favour with youngsters from the upper strata in India who believe that thisis the original Coke or Pepsi.

Different distribution channels like telemarketing, direct mails, Internetmarketing and personal selling are being used to lure customers of the same targetmarket resulting in irritability among customers, duplication of efforts and highcosts. This is particularly true of credit card markets, internet service providers,etc. The adequate strategy would be to identify the most suitable distribution channelfor each target market and pursue it.

The Indian cosmetic major, Lakme, maintains three types of distinctdistribution channels for its three target markets. The small neighborhood shopsstore commonly used skin care products such as moisturizers and sunscreen lotions.The bigger shops in central marketplaces and specialty stores stock the completerange of personal care products. The exclusive salons started by Hindustan Lever

NOTES


Market Segmentation(the company that owns the Lakme brand) targets the elite group and stocks theexclusive range of premium cosmetics, besides providing grooming services.

Sometimes customers would like to compare different brands before decidingon one. This is particularly true for high priced items like cars which are mostlysold from one-brand stores. The company has to make it convenient for customersto compare brands. It would be a good idea to locate stores of different brandsnear each other or permit their brands to be sold in multiple-brand stores.

Customers will inevitably compare, and so a company might as well make itconvenient for them and let it happen in its proximity so that it can exert someinfluence over the choice.

For products that are bought on impulse, it is important to make it availablewidely as the consumer will buy the next preferred brand if his desired brand is notavailable. It is imperative for the company to understand that in the same productcategory, members of different target markets will buy differently.

Therefore, it is important to tailor the distribution arrangements accordingto the way the target market shops.

4. Price differentiation

Price differentiation involves estimating the price sensitivity of the target marketand offering relevant values on the basis of such an estimation. A target market canbe totally price insensitive and may desire value of the highest order. These valuescan be exclusivity, sheer luxury, symbol of status or royalty. They essentially signifybelongingness to an exclusive club and are often accompanied with the owner’spassionate attachment to the product.

A target market can be highly price sensitive and will go for mere functionalityof the product if it finds the price of available products high. Customers of thistarget market yearn for better products, but will not be willing to pay a price for it.If a company offers a better product at the existing price level, such customerswould buy it.

A third type of target market is emerging. This market’s price sensitivity ismoderate and is willing to pay higher price for more features and benefits. Thiswould be a big market in the future because income and aspiration levels ofcustomers are rising throughout the world.

Most segments desire the same values. What differentiates them is themanifestation of these values. For instance, luxury is a desirable value for all theabove segments. But the way luxury is manifested, say, for the purchase of aproduct category such as automobiles, presents vast contrasts. The super luxurysegment would be interested in the ultimate luxury statement, maybe a BMW 7iseries, the highly price sensitive segment may buy its first small car for the family,whereas the market with moderate price sensitivity may purchase a mass luxury

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car. Therefore, it becomes essential to define the target market in terms of its pricesensitivity and its corresponding desire for high order values like royalty, merefunctionality/benefits and more features / benefits.

Criteria For Successful Positioning

ClarityThe positioning idea must be clear in terms of both target market and differentialadvantage. The target market should be clearly demarcated and identifiable interms of demographic or geographic parameters, or a combination of both. Eachtarget market of the company should be different from the other. The target marketshould be clearly defined in terms of being served by a distinct value proposition.The value proposition should be clearly communicated.

Most companies do not clearly communicate the corresponding valuepropositions because they want their offerings to be acceptable to customers otherthan those in their target market. They feel that defining value propositions willnarrowly restrict their market.

Sometimes, companies may not have researched their target markets wellenough to know their requirements. So the value proposition that they communicateand deliver may not be suitable for the intended market.

The value proposition is communicated mostly through advertising.Advertising agencies are responsible for communicating the value proposition.Though the company briefs the agency, a third party can never completelyunderstand the subtle elements embedded in the value proposition. Therefore,advertising may do a poor job of communicating the value proposition. Advertising,in an effort to be more creative, tries to create images, stories, jingles and thesecannot truly convey or represent the value proposition. In fact, the more ‘creative’the advertising, the more likely it is to deviate from its intended goals of effectivecommunication of conveying the value proposition to the intended target market.

Consistency

Confusion will arise if changes in positioning planks occur frequently. For instance,if a company focuses on quality of service in one year, and then next year it changesits positioning to superior product performance, the consumer would not knowwhat to expect from the offering of the company. Customers who were attractedto the previous positioning of the company may now desert it. New customersmay not find the new positioning of the company credible, as their image of thecompany is something other than what it is claiming to become.

A company which changes its positioning planks frequently will leavecustomers confused about its real identity. Customers will not know what thecompany stands for. A company has to stick to a positioning plank for a reasonablelength of time so that the new image sinks in. A company feels that all that a new

NOTES


Market Segmentationpositioning requires is an ad campaign presenting the new status. But positioning isjust an external manifestation of what the company really is. So if a companychanges its positioning plank it has to transform itself to become true to its newpositioning. No company can transform itself completely so frequently. And if thecompany has not been able to align with its new positioning, the customers will notget what they have been promised in the new positioning plank.

But consistency does not mean permanence. A company may change itsinitial positioning either because customers demand different value propositions,or because the company may have acquired new resources enabling it to besomething else.

Credibility

The differential advantage must be credible to customers. Credibility meansbelievability and trustworthiness. Positioning is a promise made to the customer.The customer must believe that the company will deliver what it promises, and iscapable of delivering the promise. Through advertisements and its public relationefforts, the company should be able to demonstrate its capability to deliver thepromised utility. Everytime a customer buys the company’s product he shouldhave got what the company promised in its positioning strategy. Through word ofmouth the company develops a reputation for delivering its promised value.Credibility built through personal use of the product and word of mouth is strongerthan credibility built through advertising and public relations.

Competitiveness

The differential advantage should offer something of value to the customer whichthe competition has failed to supply. The company should be able to develop oracquire distinct set of resources and processes. This unique set of resources andprocesses is used to deliver a distinctive value which no other company can possiblydeliver, since the latter lack the set of resources and processes used to create it.Therefore, the key to be able to provide differential value to customers is to possessa distinctive set of resources and processes which the competition does not possess.

Sine qua non of positioning

Positioning is not an abstract art. It is important for firms to understand and implementa few fundamental dos and don’ts to attain successful positioning.

The positioning of a corporate or a brand should be clear and precise. Theunique proposition made to the customer should be brief and catchy. Insteadof overloading customers with a maze of complicated information, companiesshould be precise and concise.

Market Segmentation

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A company cannot hope to reach out to the entire market with one positioningappeal. The target audience should be determined, and the positioning appealand message should be tailored to it.

The product or service should be set apart from what competitors areoffering. If the product or service being offered by the company is notbetter than or different from that of competition, why should customers buyit? It is extremely important to state that one compelling reason why thecompany’s product is the best for the target customers.

The positioning statement should clearly reflect what the organization standsfor, and what it is about. Its values, intent and offering should be clear fromits positioning statement.

Positioning should address the felt needs of the customer. Customers shouldbe told as to how the company’s product will fulfil these needs. Such benefitsshould be stressed in the positioning statement. These needs should bespecific, measurable and something that customers really want. Instead ofbeing vague that the company offers a lot of variety or selection, a companyshould say that it has twenty-five different models, and five colours in eachmodel.

Positioning appeals should be specific. One unique value proposition thatcustomers desire the most must be present in the product.

The company should also be able to deliver what it promises to the customeras its success depends on its credibility.

Repositioning

Repositioning involves changing target markets or the differential advantage orboth. There are four generic repositioning strategies.

Change in the image of the product

The product may be acceptable in functional terms but fails because it lacks therequired image. The communication emanating from the company is overhauled.The advertising message is changed. The contexts and the structure of the contextsin which the customers come into contact with the company are changed to reflectthe new image.

It is not easy to affect such a repositioning. Because the company and itsproducts do not change in any substantive way, it is very difficult for the companyto believe that it is different from what it was earlier. And unless the company doesnot truly believe in its new image, it cannot communicate the new image effectivelyto its customers. A company should engage in intensive internal communication tomake its people feel differently about themselves before they start projecting thenew image to the customers.

NOTES


Market SegmentationOften, a company may make superficial external changes, such as inpackaging, to convey this type of repositioning to its internal and external customers.They do not work.

Product repositioning

The product is modified to make it more acceptable to its present target market.Customer requirements may have changed and the product has to be modified tobe able to serve the new needs effectively. The company may have acquired newresources and competencies enabling it to modify the product so that it serves thetarget market better.

Intangible repositioning

The company targets different market segments with the same product. Thecompany is able to locate a segment which has requirements similar to those of thesegments it is serving. The company retains its value proposition and offers it tonew segments.

Tangible repositioning

Both product and target market are changed. A company may decide to move upor down a market by introducing a new range of products to meet the needs of thenew target customers.

Check Your Progress

6. Define promotional differentiation. How does it differ from productdifferentiation?

7. What are the criteria for successful positioning of a product?8. What are the four generic repositioning strategies?


1. Segmentation refers to the division of a diverse market into a number ofsmaller, more similar sub-markets.

2. A target market is a chosen segment of market which a company decides toserve.

3. The three broad groups of consumer segmentation criteria are: behavioural,psychographic and profile variables.

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4. Psychographics is, in common parlance, lifestyle analysis or AIO research.It consists of a long list of statements designed to capture relevant aspectsof a consumer, like personality, hinting motives, interests, attitudes, beliefsand values.

5. When goods and services available in the market are in tune with lifestylepatterns and values, consumer market reactions are favourable.

6. Promotional Differentiation arises from unique, valued images created byadvertising or superior services provided by salespeople. Productdifferentiation on the other hand, results from added features which givecustomers benefits that rivals cannot match.

7. The four C’s for successful positioning of a product are:a) Clarityb) Consistencyc) Credibilityd) Competitiveness

8. The generic repositioning strategies are:a) Change in the image of the productb) Product repositioningc) Intangible repositioningd) Tangible repositioning

2.6 SUMMARY

Segmentation involves identification of groups of individuals or organizationsthat have significant implications for the determination of a marketing strategy.Segmentation refers to the division of a diverse market into a number ofsmaller, more similar sub-markets.

By breaking a market into its constituent segments, a company maydifferentiate its offerings between segments, and within each segment it candifferentiate its offering from its competitor. By creating a differentialadvantage over the competition, the company gives the customer a reasonto buy from it rather than from its competitors.

Markets are rarely static. As customers become more affluent, they seeknew experiences and develop new values, and new segments emerge. Thecompany may spot a new underserved market segment and meet its needsbetter than competition.

Behavioural variables such as benefits sought from the product, and buyingpatterns such as frequency and volume of purchase, may be considered the

NOTES


Market Segmentationfundamental basis. Psychographic variables are used when the purchasingbehaviour is correlated with the personality or lifestyle of consumers. Profilevariables such as socio-economic group or geographic locations are valuablein describing the customers of the identified segment.

Differences in purchase behaviour can be based on the time of purchaserelative to the launch of the product or on the patterns of purchase. When anew product is launched, a key task is to identify the innovator segment ofthe market. Other segments of the market may need more time to assessthe benefits and delay purchase until after the innovators have taken theearly risks of purchase.

Geographic segmentation is useful when there are geographic differences inconsumption patterns and preferences. Variations in food preferences mayform the basis of geographic segmentation.

Positioning strategy (product positioning) is the essence of the marketingmix. The way a product is positioned explains the purpose of that product.It articulates how it will satisfy the customer needs.

Target market selection is a part of positioning, whose objective is to createand maintain a distinctive place in the market for the company’s products.This is done by a marketing mix, by which the company creates a productthat is specific and special for the customer.

However, the company must ensure that each element of the marketing mixconforms to its positioning.

Clarity, consistency, credibility and competitiveness are the criteria forsuccessful positioning.

Companies may also reposition themselves if the need arises.

2.7 KEY WORDS

Segmentation: It is the division into separate parts or sections. Consumer: It refers to a person who purchases goods and services for

personal use. Psychographics: It is the study and classification of people according to

their attitudes, aspirations, and other psychological criteria, especially inmarket research.

Lifestyle: It is the way in which a person lives. Positioning: It refers to the place that a brand occupies in the minds of the

customers and how it is distinguished from the products of the competitorsand different from the concept of brand awareness.

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1. What are profile variables?2. What indicates successful positioning?3. Which factors are included in major positioning strategies?


1. Describe the behavioural segmentation.2. What are demographic and geographical variables? Explain.3. Illustrate the characteristics of lifestyle.4. Discuss the major strategies of positioning.







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Consumer Motivation

UNIT 3 CONSUMER MOTIVATIONStructure

3.0 Introduction3.1 Objectives3.2 Needs, Goals and Motivation

3.2.1 Dynamic Nature of Motivation3.2.2 Defence Mechanisms or Reactions to Frustration3.2.3 Arousal of Motives3.2.4 Theories of Needs and Motivation

3.3 Measurement of Motives and Motivational Research3.4 Answers to Check Your Progress Questions3.5 Summary3.6 Key Words3.7 Self Assessment Questions and Exercises3.8 Further Readings

3.0 INTRODUCTION

While making decisions related to purchase activity, consumers vary amongst eachother. They also differ within themselves across buying situations. This is becausethe dynamics that operate while consumer decision making are significantly different.The consumer decision making process is impacted by individual determinantsthat are specific to an individual, i.e., psychological influences, and his self andgroup influences that are general across a class of customers and take the form ofsociological influences. Such psychological influences include the forces that impactconsumer decision making. One of such psychological influences is consumer needsand motivation. Consumer motivation is the urge or drive to satisfy needs throughproduct purchase and its consumption. This unit deals with the concept of consumermotivation which influences consumer decision making.

3.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of motivation Discuss the types of goals and needs Explain the types of arousal of motives Describe the motivational research

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3.2 NEEDS, GOALS AND MOTIVATION

All types of behaviour are goal oriented. The outcome of a motivated behaviour isthe achievement of a goal. Previous knowledge and thinking processes decide thedirection or the form that behaviour will take. In other words, they decide theresultant goal. Goals are of two categories: Product-specific and generic goals. Ageneric goal can be said to be a general category of goal which could result in thefulfilment of a particular need; while a product-specific goal can be described as aspecifically branded or labelled product which a person considers as a method tofulfil a need. Product-specific needs are many a times referred to as wants.Innate needs: These are the needs which are present in an individual from thetime he is born and remain throughout his lifetime. Such needs are physiological(biogenic) in nature. Those factors that are necessary for sustaining life, shelter,food, clothing and water are called innate needs.Acquired needs: These are the needs which develop after birth and are usuallypsychological. They are also referred to as psychogenic, i.e., generated in one’spsyche. Love, acceptance, esteem and self-fulfilment are examples of acquiredneeds. For every need, there are numerous different goals. Goals are selected byindividuals on the basis of values, experiences, cultural norms and physical abilities.Individuals also select their goals keeping in mind how accessible the goal may bein the prevailing social and physical environment.Depending on certain factors, needs and goals change; thus they are said to beinterdependent. The following are the factors which influence a person’s needsand goals:

(i) The individual’s physical ability(ii) Environment(iii) Interaction with other people(iv) Previous experience or knowledge

Decisions regarding a product, whether one would or would not like to ownsomething, are perceived in terms of the articulation of an individual’s self-image.A product that best matches a consumer’s self-image has a greater probability ofbeing chosen than one that does not.

Fulfilling needs is a never-ending process. As soon as an individual fulfilsone need, other new, higher-order needs arise which must be satisfied.

Unfulfilment of goals usually results in feelings of frustration and helplessness.The two most popular methods of reacting to frustration are: ‘fight’ or ‘flight’.People usually find a way around the hindrance to goal fulfilment or replace thegoal with a suitable substitute. This is referred to as the method of ‘fight’. In ‘flight’,the priority of the individual will be to defend or safeguard their self-esteem ratherthan fulfilling the need. Aggression, repression, projection, regression, rationalization,

NOTES


Consumer Motivationwithdrawal, autism and identification are examples of defence mechanisms adoptedby individuals when they are in the ‘flight’ mode.

It is difficult to come to a conclusion about a motive from consumer behaviourstudies. This is because different individuals having varied needs may select thesame goals for fulfilment; in other cases, individuals with similar needs select differentgoals for achieving their goals. Psychologists differ in their opinion regarding theneeds priorities of different individuals; while most of them are of the opinion thatdifferent persons have different need priorities, others consider that most individualsexperience the same basic needs, to which they allow a similar priority ranking.

Motivation can be described as the driving force within individuals that impelsthem to action. This driving force is produced by a state of tension, which exists asthe result of an unfulfilled need. The specific courses of action that consumerspursue and their specific goals are selected on the basis of their thinking processand previous learning.

Relationship between needs and goals

Needs and goals are interdependent—neither exists without the other. People are often not as aware of their needs as they are of their goals. Individuals are usually more aware of their physiological needs than they

are of their psychological needs.

Positive and Negative Motivation

Motivation can be negative and positive. People can feel a driving force eithertowards an object or away from it.

Some psychologists refer to positive motivation as needs, wants or drives.They may refer to negative motivation as negative drives, fears and aversions.Some distinguish between needs and wants by calling wants product-specific needs.

Negative and positive motivational forces seem to differ considerably,particularly in terms of physical activity. Nonetheless, they are basically similar.They both initiate and maintain human behaviour.

There is no distinct demarcation between needs, wants and desires.Goals can be either positive or negative. Since a positive goal is one towards

which behaviour is directed, it is usually called an approach object. Likewise,since a negative goal is one from which behaviour is directed away, it is known asan avoidance object. Individuals get motivationally aroused by a threat to, or theremoval of, behavioural freedom. This motivational state is called psychologicalreactance and is usually manifested by a negative consumer response.

Rational vs Emotional Motives

According to consumer behaviourists, the motives for choosing goals fall into twocategories, rational and emotional. For them, rationality means that when choosinga product, consumers keep all alternatives in mind and choose the one that will

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provide them maximum utility. In the context of marketing it means that the customerwill make a choice based on objective criteria. Examples of these criteria includeprice, size, weight, and so on. Emotional motives indicate choosing goals as persuch subjective or personal criteria as status, pride, affection and fear. Thisassumption is based on the belief that emotional or subjective criterion does notderive maximum satisfaction or utility. At the same time, it is not unreasonable toconsider that usually consumers choose those alternatives that according to them,serve to maximize their satisfaction.

Consumer researchers who advocate the positivist research perspectivetry to consider all types of consumer behaviour as rationally motivated. Hence,they try to separate the factors resulting in such behaviour, so as to enable them inpredicting, and thereby influencing, future behaviour. Experientialists are ofteninterested in studying the hedonistic pleasures that are provided by some types ofconsumption behaviour as sensuality, fun and fantasy. They study consumers forgaining knowledge and understanding how they behave in different and uniquesituations.

3.2.1 Dynamic Nature of Motivation

Needs and goals are constantly growing and changing. They do not cease becausegoals and needs that exist are not completely satisfied. If needs have at all beenfulfilled, they are replaced by newer ones that are higher in level.

1. Needs are never completely satisfied. Most human needs are not fully orpermanently satisfied.

2. Temporary goal achievement does not lead to adequate satisfaction of theneed. As needs are satisfied they are replaced by new ones. Somemotivational theorists are of the opinion that a hierarchy of needs exists,which imply that fulfilment of lower-order needs leads to new, higher-orderneeds. Marketers should be attuned to changing needs. Success and failuresinfluence goals.

3. Researchers consider that the behaviour of an individual will be directed toa substitute goal when he fails in attaining a certain goal which he considerswill fulfil a specific need. The goal that substitutes the main one may not beas satisfactory as the latter, but it will help in relieving the need-inducedtension to some extent, thereby reducing the feeling of frustration. Asdiscussed earlier, each individual’s reaction to a frustrating situation isdifferent. Adaptive people try to derive fulfilment by countering an obstacleor by choosing an alternate goal. Those who are not very adaptive feel thatthe fact that they are unable to derive personal fulfilment is a personal failureand hence, they face anxiety.

4. Specific goals are often selected because they satisfy several needs. Aproponent need is a triggering mechanism for need fulfilment.

NOTES


Consumer Motivation5. Needs and goals vary among individuals. It is difficult to infer motives frombehaviour. People with different needs may seek fulfilment through selectionof the same goals, although people with the same needs may seek fulfilmentthrough different goals.

3.2.2 Defence Mechanisms or Reactions to Frustration

People who cannot cope with frustration often mentally redefine thefrustrating situation in order to protect their self-image and defend their self-esteem. These reactions are known as defence mechanisms.

Reaction to the frustration of not being able to reach goal attainment cantake many forms, such as aggression, rationalization, regression, withdrawal,projection, autism, identification and repression.

Marketers often consider the protection of self-esteem by consumers whenselecting advertising appeals. The ads (appeals) often portray a personresolving a particular frustration through the use of the advertised product.

3.2.3 Arousal of Motives

The specific needs of an individual remain dormant most of the time. At any pointof time, the internal stimuli due to the individual’s physiological condition, emotionalor cognitive processes or external stimulus may cause arousal of a specific set ofneeds.

(a) Physiological arousal

This type of arousal occurs due to bodily needs, and is based on a person’sphysiological condition at a particular moment.

Almost all physiological cues are involuntary, regulated by the brain andnervous system; but it should be kept in mind that they arouse related needswhich result in tensions that lead to restlessness until the needs are fulfilled.

(b) Emotional arousal

Sometimes, thinking or daydreaming leads to arousal of latent or dormant needs.This may result in uncomfortable tensions and restlessness which ‘thrust’ themtowards a type of behaviour which is goal-oriented.

(c) Cognitive arousal

Sometimes, random thoughts or personal achievement result in cognitive awarenessof needs.

(d) Environmental arousal

The set of needs which is activated at a specific point of time is usually determinedby specific signals arising from the environment. Individuals who exist in anenvironment that is highly varied and complex usually experience many favourable

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circumstances which result in the arousal of needs. However, when people live ina poor or deprived environment, fewer needs are activated. According to thebehaviourist school, motivation is considered as a mechanical process, andbehaviour is considered to be the response to a stimulus, while ignoring the elementsof conscious thought.

According to the cognitive school, all types of behaviour are directed towardsfulfilment of goals. Past experiences and needs are analysed, classified and changedinto attitudes and beliefs which function as predispositions to behaviour.

3.2.4 Theories of Needs and Motivation

Let’s look at some of the major theories.Types and Systems of Needs

Most human needs differ from each other in their content and length. Althoughthere are very few or no disagreements regarding particular types of physiologicalneeds, significant amount of disagreement exists regarding particular types ofpsychological or psychogenic needs. According to Henry Murray, there are twenty-eight different types of psychogenic needs, which in turn serve as fundamentalconstructs for a whole lot of popular personality tests. Basic needs according toMurray are constituted of numerous motives which are considered to play animportant role in consumer behaviour. Some of these motives are acquisition,achievement, recognition and exhibition.Maslow’s theory of motivation

Dr Abraham Maslow primarily theorized about human motivation. His theory hasbeen widely accepted by practitioners of management. According to Maslow’stheory human needs can be divided into five fundamental levels. These can also beranked as per the order of their importance from the low-level biogenic needs tothe high-level psychogenic needs.According to Maslow’s theory, an individual could have the following motivations:

Physiological needs like hunger and thirst Safety needs like accidents and ill health Belongingness and love Self-esteem and status Self-actualization

The motives determine the choice criteria. For instance, a customer who is drivenby esteem and status motive may use self-image as a key choice criterion whenbuying a car.

Different consumers have varying motivations while buying the same product.Therefore, the choice criteria of various consumer segments differ, and the marketersmust choose the most relevant motivating factor while positioning their product.

NOTES


Consumer MotivationFor instance, some consumers may buy food for satisfying hunger, while somemay frequent a fast food joint to hang out with friends or family; others may enjoygourmet food service provided by a leading luxury hotel. Each segment considersdifferent motives while buying the same product. Therefore, while the segmentthat only wants to satisfy hunger may look for convenience or price, these factorsmay be inconsequential for the segment that wants gourmet food.

1. Physiological needs: These are those items that are required to sustainbiological life and include; food, water, air, shelter, clothing and sex. Theseare dominant when chronically unsatisfied.

2. Safety needs: These needs are concerned with much more than physicalsafety. They include order, stability, routine, familiarity, control over one’slife and environment, and certainty. Health is also a safety concern.

3. Social needs: These needs relate to such things as love, affection, belongingand acceptance.

4. Egoistic needs: These needs can be inward oriented or outward oriented.Inward-oriented ego needs portray a person’s needs for success, self-esteem,self-acceptance, independence and personal satisfaction when a job isperformed well. Outward-oriented ego needs are constituted by the needfor recognition, prestige, status and reputation.

5. Need for self-actualization: These refer to a person’s desire to be thatwhat his or her potential permits.

An Evaluation of the need hierarchy and marketing applications

The main disadvantage of Maslow’s theory is that it cannot pass empiricaltests; it is not possible to evaluate the precision of fulfilment of one need,before the subsequent higher need takes precedence.

Maslow’s hierarchy offers a useful, comprehensive framework for marketerstrying to develop appropriate advertising appeals for their products.

The hierarchy enables marketers to focus their advertising appeals on aneed level that is likely to be shared by a large segment of the prospectiveaudience.

The hierarchy facilitates product positioning or repositioning.Examples of needs that can be integrated into advertisements are the needs forachievement, power and affiliation.

Trio of Needs Theory

Many psychologists insist that there are three types of fundamental needs, namelythe need for power, affiliation and achievement.

1. Power: The need for power is a person’s desire to control his environment.There are many people whose self-esteem improves by virtue of havingexercised power over others.

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2. Affiliation: This need suggests that feeling of belonging influences individualbehaviour. This also includes the desire for acceptance and friendship. Thosewho have a high need for affiliation are socially dependent on other people.

3. Achievement: Persons who have a strong urge for fulfilment usually considerpersonal achievement as their ultimate goal. This need is intimately relatedto the self-actualization and egoistic need. Such people exhibit tremendousself-confidence. They also willingly take risks and welcome feedback.Monetary rewards form a mode of feedback for them as it indicates howwell they have performed. Such people are usually more self-confident,enjoy taking calculated risks, actively analyse their surroundings, and valuefeedback. Monetary rewards enable an important type of feedback as tohow they are performing. People with high achievement needs prefersituations in which they can take personal responsibility for finding solutions.Individuals with specific psychological needs tend to be receptive toadvertising appeals directed at those needs. They also tend to be receptiveto certain kinds of products. Knowledge of motivational theory providesmarketers with additional bases on which to segment their markets.

Often, market segmentation is based on needs hierarchy. Different advertisementsare meant to appeal to different need-segments. Successful positioning relies onfinding a niche which has not been noticed by a competing brand or product.

3.3 MEASUREMENT OF MOTIVES ANDMOTIVATIONAL RESEARCH

The measurement of motives is concerned with finding answers to the followingquestions: How are motives identified? What is the method of motive measurement?How do researchers understand which motives result in specific types of behaviour?It is difficult to find answers to such questions. For, as a construct, a motive ispurely hypothetical. Being intangible, it cannot be observed, felt or smelled. Thisimplies that no system of measurement can serve as a reliable index. Therefore,researchers tend to rely on a combination of qualitative research methods forestablishing the presence and/or the strength of different motives.

The results of qualitative research techniques are largely dependent on theresearcher. The researcher focuses not only on the data, but also on what the datacan imply. Therefore, many consumer behaviourists are reluctant to rely on onetechnique alone.

By using, however, a combination of assessments (called triangulation)based on behavioural data (observation), subjective data (self reports) andqualitative data (projective tests, collage research, etc.), consumer researchersfeel more confident. The following three methods are frequently applied foridentifying and evaluating people’s motives: observation and inference, subjectivereports and qualitative research (including projective techniques). The outcome of

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Consumer Motivationnone of the methods can be considered separately. Researchers usually combinetwo or all the three methods together and then evaluate the presence of strength ofconsumer motives.

Motivational research is qualitative research developed to understand thelevel of awareness of a customer. Despite a few disadvantages, motivational researchhas been beneficial to marketers concerned with developing new ideas and newcopy appeals.

Though some marketers are of the opinion that qualitative research doesnot result in solid figures which objectively ‘prove’ the point under consideration,others are convinced that qualitative techniques are more revealing than quantitativemethods.

Motivational research

Motivational research is a term generally used for referring to qualitative methoddeveloped for uncovering the end-user’s subconscious or hidden motivation.

The basis for the development of motivational research was provided bythe psychoanalytic theory of personality, developed by Freud. The theory isdeveloped on the consideration that unconscious urge, especially biological andsexual drives, form the basis of human motivation and personality.

Dr Dichter adapted Freud’s psychoanalytic techniques to the study ofconsumer buying habits. Before Dr Dichter, marketing research focused on whatconsumers did rather than why they did it. By the early 1960s, drawbacks tomotivational research were noted. Because the qualitative research techniques areintense in nature, small samples are considered; thus, there was concern aboutmaking the results public. Moreover, marketers also realized that the evaluation ofprojective tests and in-depth interviews were highly subjective.

Three different research analysts who are provided with the same data mightend up generating three different reports.

Other consumer theorists noted other contrarieties in applying Freudiantheory to the study of consumer behaviour. There are a number of researchtechniques that can be used to delve into the consumer’s unconscious or hiddenmotivations.

Evaluation of motivational research

Despite these criticisms, motivational research is still regarded as an importanttool by marketers who want to gain deeper insights into the whys ofconsumer behaviour than conventional marketing research techniques canyield.

Motivational research’s principal use today is in the development of newideas for promotional campaigns, ideas that can penetrate the consumer’sconscious awareness by appealing to unrecognized needs.

Consumer Motivation

NOTES


Motivational research also provides marketers with a basic orientation fornew product categories, and enables them to explore consumer reactionsto ideas and the advertising copy at an early stage to avoid costly errors.

Despite the drawbacks of motivational research, there is new and compellingevidence that the unconscious is the site of a far larger portion of mental lifethan even Freud envisioned. Research studies show that the unconsciousmind may understand and respond to non-verbal symbols, form emotionalresponses and guide actions largely independent of conscious awareness.

Check Your Progress

1. What are generic and product-specific goals?2. What are innate needs?3. List the factors which influence a person’s needs and goals.4. What is motivation?5. What is motivational research?


1. A generic goal can be said to be a general category of goal which couldresult in the fulfilment of a particular need; while a product-specific goal canbe described as a specifically branded or labelled product which a personconsiders as a method to fulfil a need.

2. The factors that are necessary for sustaining life, shelter, food, clothing andwater are called innate needs.

3. The following are the factors which influence a person’s needs and goals:(i) The individual’s physical ability(ii) Environment(iii) Interaction with other people(iv) Previous experience or knowledge

4. Motivation can be described as the driving force within individuals thatimpels them to action.

5. Motivational research is a term generally used for referring to qualitativemethod developed for uncovering the end-user’s subconscious or hiddenmotivation.

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Consumer Motivation3.5 SUMMARY

Goals are of two categories: Product-specific and generic goals. A genericgoal can be said to be a general category of goal which could result in thefulfilment of a particular need; while a product-specific goal can be describedas a specifically branded or labelled product which a person considers as amethod to fulfil a need.

The following are the factors which influence a person’s needs and goals:(i) The individual’s physical ability(ii) Environment(iii) Interaction with other people(iv) Previous experience or knowledge

The two most popular methods of reacting to frustration are: ‘fight’ or ‘flight’.People usually find a way around the hindrance to goal fulfilment or replacethe goal with a suitable substitute. This is referred to as the method of ‘fight’.In ‘flight’, the priority of the individual will be to defend or safeguard theirself-esteem rather than fulfilling the need.

Motivation can be described as the driving force within individuals that impelsthem to action. This driving force is produced by a state of tension, whichexists as the result of an unfulfilled need. The specific courses of action thatconsumers pursue and their specific goals are selected on the basis of theirthinking process and previous learning.

According to consumer behaviourists, the motives for choosing goals fallinto two categories, rational and emotional.

Specific goals are often selected because they satisfy several needs. Aproponent need is a triggering mechanism for need fulfilment.

According to Maslow’s theory human needs can be divided into fivefundamental levels. These can also be ranked as per the order of theirimportance from the low-level biogenic needs to the high-level psychogenicneeds.

The measurement of motives is concerned with finding answers to thefollowing questions: How are motives identified? What is the method ofmotive measurement? How do researchers understand which motives resultin specific types of behaviour?

Motivational research is qualitative research developed to understand thelevel of awareness of a customer. Despite a few disadvantages, motivationalresearch has been beneficial to marketers concerned with developing newideas and new copy appeals.

Consumer Motivation

NOTES


3.6 KEY WORDS

Goal: It is the object of a person’s ambition or effort; an aim or desiredresult.

Needs: It refers to a thing that is wanted or required. Motivation: It is the desire or willingness to do something. Motivational research: It is the psychological or sociological study of

motives, especially those influencing the decisions of consumers, voters,etc.



1. What are the two most popular methods of reacting to frustration?2. State the relationship between needs and goals.3. How is consumer motivation measured?


1. Differentiate between positive and negative motivation and rational andemotional motives.

2. What do you mean by the dynamic nature of motivation? Explain.3. Illustrate the Maslow’s theory of motivation and Trio of Needs theory.4. Evaluate motivational research.







NOTES


Consumer Personality

UNIT 4 CONSUMER PERSONALITYStructure

4.0 Introduction4.1 Objectives4.2 Consumer Personality: Nature and Influences on Consumer Behaviour4.3 Consumer Emotions: Nature and Uses in Advertising4.4 Consumer Perception and its Implications4.5 Answers to Check Your Progress Questions4.6 Summary4.7 Key Words4.8 Self Assessment Questions and Exercises4.9 Further Readings

4.0 INTRODUCTION

Marketers and advertisers have long tried to appeal to consumers in terms of theirpersonality traits. They feel that consumers purchase, and when and how theyconsume, are likely to be influenced by their personality factor. For this reasonmarketers have frequently depicted specific personality characteristics in theirmaking and advertising messages. Personality may be defined as the innercharacteristics that examine and reflects how an individual responds to hisenvironment. Personality is likely to influence the individual’s product choices.They affect the way consumers respond to marketers’ promotional efforts, andwhen, where and how they consume particular products or services. Therefore,the identification of specific personality characteristics associated with consumerbehaviour has proven to be highly useful in the development of a firm’s market.Let us discuss in detail about the significance of consumer personality for marketersand advertisers in the following unit.

4.1 OBJECTIVES

After going through this unit, you will be able to: Understand the nature of consumer personality and its effect on consumer

behaviour Describe the concept of consumer emotion Explain the meaning and implications of consumer perception


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4.2 CONSUMER PERSONALITY: NATURE ANDINFLUENCES ON CONSUMER BEHAVIOUR

The characteristics that decide how an individual will respond to his/her environmentconstitute his personality. This definition emphasizes inner characteristics. Theseare those traits, factors, attributes and qualities that distinguish individuals fromone another. The identification of specific personality characteristics associatedwith consumer behaviour has proven to be highly useful in the development of afirm’s market segmentation strategies.

The Nature of Personality

In the study of personality, three distinct properties are of major importance: Personality reflects individual differences. Personality is consistent and enduring. Personality can change.

Personality reflects individual differences: An individual’s personality is a uniquecombination of factors; no two individuals are exactly alike. Personality is a usefulconcept because it enables us to categorize consumers into different groups onthe basis of a single trait or a few traits.Personality is consistent and enduring: Marketers learn which personalitycharacteristics influence specific consumer responses and attempt to appeal torelevant traits inherent in their target group. Even though an individual’s personalitymay be consistent, the consumption behaviour often varies considerably becauseof psychological, sociocultural and environmental factors that affect behaviour.Personality can change: An individual’s personality may be altered by major lifeevents, such as the birth of a child, the death of a loved one, a divorce, or a majorcareer change. An individual’s personality also changes as part of a gradual maturingprocess. Personality stereotypes may also change over time. There is a prediction,for example, that a personality convergence is occurring between men and women.

Theories of Personality

Three theories of personality are prominent in the study of consumer behaviour: Freud’s Psychoanalytic Theory Neo-Freudian Theory Trait Theory

1. Freud’s Psychoanalytic Theory

The foundation for the study of motivational research has been provided by Freud’stheory of psychoanalysis. The basic premise of this theory is that human drives areunconscious in nature but they do serve to influence consumer behaviour.

NOTES


Consumer PersonalitySigmund Freud’s psychoanalytic theory of personality is the cornerstone ofmodern psychology. This theory was built on the premise that unconscious needsor drives, especially biological and sexual drives, are at the heart of human motivationand personality.

Id, superego and ego

Id is the ‘warehouse’ of primitive and impulsive drives, such as thirst, hungerand sex, for which the individual seeks immediate satisfaction without concernfor the specific means of that satisfaction.

Superego is the individual’s internal expression of society’s moral and ethicalcodes of conduct. The superego’s role is to see that the individual satisfiesthe needs in a socially acceptable fashion. The superego is a kind of ‘brake’that restrains or inhibits the impulsive forces of the id.

Ego is the individual’s conscious control which functions as an internal monitorthat attempts to balance the impulsive demands of the id and the socioculturalconstraints of the superego.Freud emphasized that an individual’s personality is formed as he or she

passes through a number of distinct stages of infant and childhood development.These distinct stages of infant and childhood development are: oral, anal, phallic,latent and genital stages. An adult’s personality is determined by how well he orshe deals with the crises that are experienced while passing through each of thesestages.

Freudian theory and product personality

Those stressing Freud’s theory see that human drives are largely unconscious,and that consumers are primarily unaware of their true reasons for purchasingwhat they buy.

These researchers focus on consumer purchases and/or consumptionsituations, treating them as an extension of the consumer’s personality.

2. Neo-Freudian Theory

Several of Freud’s colleagues disagreed with his contention that personality isprimarily instinctual and sexual in nature. They argued that social relationsare fundamental to personality development. According to the Neo-Freudian theory,social relationships play an essential role not only in the formation of a personality,but also in its development.

In Alfred Adler’s opinion, human beings wish to surmount feelings ofinferiority. He viewed human beings as seeking to attain various rational goals,which he called the style of life, placing emphasis on the individual’s efforts toovercome the feelings of inferiority.

Harry Stack Sullivan emphasized the desire to establish relationships thatare rewarding. They therefore focus on reducing tensions.


NOTES


Karen Horney is of the opinion that individuals attempt to overcome feelingsthat cause anxiety. She focused on the impact of child – parent relationships,especially the individual’s desire to conquer feelings of anxiety. She further proposedthree personality groups: compliant, aggressive and detached. Compliant individualsare those who move toward others—they desire to be loved, wanted andappreciated. Aggressive individuals move against others—they desire to exceland win admiration. Detached individuals move away from others—they desireindependence, self-sufficiency and freedom from obligations.

A personality test based on the above (the CAD) has been developed andtested. It reveals a number of tentative relationships between scores and productand brand usage patterns. It is likely that many marketers have used some of theseneo-Freudian theories intuitively.

3. Trait Theory

As a theory it departs from other approaches to personality measurement in amajor way. Its basic postulate is that each person possesses inherent psychologicaltraits. These traits include materialism, desire for novelty, innovativeness and theneed for recognition. Specially-designed scales and personality inventories canmeasure these traits. Many researchers prefer to use personality inventories becausethese are easy to use and can be self-administered. Brands too have personalities.These include gender and ‘human-like’ traits. They help generate loyalty, responseand preferences in the consumer.

Each individual perceives himself/herself in terms of a certain image. Often,consumers purchase products so as to extend or enhance their self-image. Theyeven shop at stores that in their opinion conform to their perceived self-image.The Internet has enabled the creation of virtual personalities. Experiences in thechat rooms often cause consumers to explore alternative personalities.Types of traits measured include:

Consumer innovativeness—The degree to which a person is receptive toexperiences that are new

Consumer materialism—The extent of a person’s attachment to possessionsthat are considered ‘worldly’

Consumer ethnocentrism—The possibility that a consumer will rejectproducts that are foreign made

Research has revealed that consumers make their choices based on theirpersonalities.

Personality and Influences on Consumer Behaviour

Marketers are interested in understanding how personality influences theconsumption behaviour because such knowledge enables them to better understandconsumers and to segment and target those consumers who are likely to respondpositively to their product or service communications.

NOTES


Consumer PersonalityConsumer Innovativeness

It is very important that market innovators learn as much as they can aboutprospective consumers. These innovators are often crucial to the success of newproducts. One can differentiate between consumer innovators and consumer non-innovators on the basis of their personality traits.Other personality traits include:

Dogmatism Social character Need for uniqueness Optimum stimulation level Variety-novelty seeking

Dogmatism: This is a personality trait whereby people displaying itexhibit considerable rigidity towards traits which are contrary to theirbeliefs. People who are not dogmatic are more open to new products.Consumers high in dogmatism are more accepting of authority-basedadvertisements for new products.

Social character: Personality trait that ranges from the inner-directedto the other-directed is called social character. Those consumers whoare inner-directed evaluate new product based on their inner values.Similarly, those consumers who are other-directed are not innovatorsand therefore, look for direction. They prefer advertisements that featuresocial environment and social acceptance.

Need for uniqueness: Some consumers always seek to be unique.These people avoid conformity.

Optimum stimulation level: Some people prefer a simple, unclutteredand calm existence, although others seem to prefer an environmentcrammed with novel, complex and unusual experiences. Persons withoptimum stimulation levels (OSLs) are willing to take risks, try newproducts, be innovative, seek purchase-related information and acceptnew retail facilities. The correspondence between an individual’s OSLand his actual circumstances has a direct relationship to the amount ofstimulation that he desires. If the two are equivalent, they tend to besatisfied. If bored, they are understimulated, and vice versa.

Variety-novelty seeking: This is similar to OSL. The most commontype of consumers are variety or novelty seeking. There appears to bemany different types of variety-seeking behaviour, such as exploratorypurchase behaviour (e.g., switching brands to experience new andpossibly better alternatives), vicarious exploration (e.g., where theconsumer secures information about a new or different alternative andthen contemplates or even daydreams about the option), and use


NOTES


innovativeness (e.g., where the consumer uses an already adoptedproduct in a new or novel way). The third form of variety or noveltyseeking—use innovativeness—is particularly relevant to technologicalproducts.

Consumers with high variety-seeking scores might also be attracted to brands thatclaim to have novel or multiple uses or applications. Marketers, up to a point,benefit from thinking in terms of offering additional options to consumers seekingmore product varieties. Ultimately, marketers must walk the fine line betweenoffering consumers too little and too much choice.

Cognitive Personality Factors

Market researchers want to understand how cognitive personality influencesconsumer behaviour. Two cognitive personality traits have been useful inunderstanding various selected aspects of consumer behaviour. They are: needfor cognition; and visualizers versus verbalizers.

Need for cognition: This is the measurement of a person’s craving for orenjoyment of thinking. Products that provide a lot of product-relatedinformation attract those consumers who have a tremendous need forcognition. They are also more responsive to cool colours.The consumers who do not have a tremendous need for cognition are moreattracted to an advertisements background. They spend more time on theprint content and have much stronger brand recall. The need for cognitionseems to play a role in an individual’s use of the Internet.

Visualizers versus verbalizers: Those consumers who favour visualinformation are known as visualizers. Verbalizers are consumers who preferwritten or verbal information and products that stress the verbal. Thisdistinction helps marketers know whether to stress visual or written elementsin their ads.

Consumer Materialism

Materialism is a trait of people who feel their possessions are essential to theiridentity. Such people are self-centred. They love to acquire and show offpossessions.

Consumer Ethnocentrism: Responses to Foreign-made Products

To identify consumer segments receptive to foreign-made products, researchershave developed and tested the consumer ethnocentrism scale—CETSCALE.CETSCALE results identify the consumers with a predisposition to reject or acceptforeign-made products. Consumers who are highly ethnocentric feel that it is wrongto purchase foreign-made products because it would hurt the domestic economy.Non-ethnocentric consumers are those who objectively evaluate products that

NOTES


Consumer Personalityare foreign made. Marketers can appeal to ethnocentric consumers by stressingnationalistic themes in their promotional efforts.

Check Your Progress

1. List the three distinct properties in the study of personality.2. What is dogmatism?

4.3 CONSUMER EMOTIONS: NATURE AND USESIN ADVERTISING

The term ‘customer’ implies an individual who buys merchandise and ventures forindividual use and the term ‘emotion’ implies a solid inclination towards one’sconditions, temperament, or associations with others. In brain science, emotion ischaracterized as a mind-blowing condition in physical and mental changes thatimpact human idea and conduct. Emotion can be connected with a wide scope ofmental issue that incorporates disposition, character, and temperament.

It was naturalist Charles Darwin who suggested that emotions advanced onthe grounds that they were versatile and permitted people and creatures to endureand recreate. Sensations of adoration and fondness lead individuals to look formates and duplicate. Sensations of dread constrain individuals to battle.

Consumer Emotion is a measure of how a customer feels about hisinvolvement in an organization. The elements behind consumer emotion areastounding. The increasing significance of consumer emotion can be summarizedby appropriating an old statement: “clients may not recall what the nature of youritem was, yet they will consistently recollect how their client experience causedthem to feel.” Those emotions can be contrast among great and extraordinaryresults for a business as consumer emotions can rouse choices. Consumer emotionis the best markers of individual buys.Nature of Consumer EmotionConsumer emotion is a solid helper of human conduct since purchasers are likelyto relate their qualities, wants or yearnings to a brand or item class.

a. Emotion is compelling in nature: Emotion might be lovely or disagreeableyet it influences the person. Positive emotions like grin or satisfaction, joy,please, fondness, joy and negative emotions like distress, pity, outrage,disturb, stun, sorrow and stress influence a consumer’s behaviour in makinga purchase.

b. Emotion shift in power: Emotion differs from individual to individual.Youngsters can go to the extraordinary finish of emotionality than grown-ups. A few people respond less on emotions and their enthusiastic power islow.


NOTES


c. Emotion includes mental changes: When an individual genuinely hurt orfurious he can’t learn, handle, and recollect things appropriately. They feeleager and discouraged in such circumstances. Accordingly, emotions assumea significant part in mental capacities.

d. Emotion is connected with energy: Every emotion has its own degree ofenergy, for example it either increments or diminishes. In a blissful or lovelystate of mind parcel of energy is created though in a dismal or discourageddisposition the energy level reductions.

e. Emotion assists with altering social connection: In verbal or non-verbalcorrespondence our conduct is seen by various individuals in the generalpublic. Their responses go about as a sign to us so we can change oursocial connection with individuals.Emotions act as a cognizant and abstract mental response on specific

occasion and are typically joined by changes in the physiological and social partsof a consumer. From this definition, we can find that an emotion has four parts, tobe specific: intellectual responses, physiological responses, social responses andinfluence. Psychological responses allude to an individual’s memory, thinking andview of an occasion. Physiological responses are principally brought about bychanges in the hormonal levels in the body. Then again, conduct responses containthe dynamic articulation of the emotion. Finally, influence incorporates the positiveor negative condition of the emotion and is the thing that makes a emotion a cognizantand emotional experience.

Effect of Consumer Emotion

Emotion impacts other mental cycles. There is an immediate connection betweenthe manner in which we think and the manner in which we feel.

Emotions and contemplations impact one another: In a cheerful mindsethappy musings come into our psyche and when we are pitiful, negativerecollections and pictures come into our brain.

Attitude: Attitude of an individual is impermanent. When one is cheated bysomebody, one chooses not to confide in anybody. Subsequently, the trustis lost. This influences our demeanour.

Creativity: When one has happy emotion, the innovativeness level in himincreases in light of the fact that in such a state of mind a wide scope ofthoughts or affiliations come into the brain.The compelling part of emotion in buyer conduct is as per the following:

Functional attractive reverberation imaging (FMRI) shows that whenassessing brands, customers principally use emotions (individual emotionsand encounters), instead of data (brand credits, highlights, and realities).

Advertising research uncovers that the customers’ enthusiastic reaction to apromotion affects their detailed purpose to purchase an item than does the

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Consumer Personalityadvertisement’s substance by a factor of 3-to-1 for TV plugs and 2-to-1for print advertisements.

Research directed by the Advertising Research Foundation presumed that“affability” is the measure generally prescient of whether a commercial willexpand a brand’s deals.

Studies show that positive emotions toward a brand affect purchaserfaithfulness than trust and different decisions, which depend on a brand’sascribes.As per Kennedy, Moore and Watson, emotions assume three significant

functions in the lives of people. To begin with, emotions are required for variationand endurance. Bliss and trust persuade an individual to perform at his best, whiledread and disturb make an individual careful to threat. Second, emotions impactan individual on how he sees the world. In this way, emotions have an administrativecapacity. Third, emotions assist individuals with conveying their requirements, needsand feelings to other people.

Emotion Used in advertisement

Emotions assume a significant part in fruitful advertising efforts. We as a wholeknow, for instance, that sweet titbits and beverages are terrible for us, howeveradvertisements for Pepsi and Coca-Cola don’t discuss fat, calories, and diabetes.Or maybe the attention is on youth, imperativeness, and great occasions. Chocolateis related with extravagance, guilty pleasure, and sexiness. Furthermore, otherpositive emotions are utilized to sell everything from clothing cleanser to videogames, mayonnaise, and disaster protection.

Advertising is to get customers to purchase something. Emotion is a solidmethod to get customers to focus. Individuals depend on their emotions whenthey make buys and create brand steadfastness. They frequently genuinely associatewith the substance of a promotion and those emotions come up when they see theitem face to face or on the web.

At the point when you watch the advertisements that become web sensationsthey regularly depend intensely on passionate substance, for example, kinship andsatisfaction. These sensations wind up urging individuals to settle on specific choiceswith regards to buys. Enthusiastic advertising identifies with what it is that individualsneed to see and how they need to feel. Passionate promoting is utilized to driveassociation and mindfulness. Individuals have a few centre emotions and enthusiasticadvertising tries to draw on these emotions.

Happiness: Brands that show individuals who are grinning and chucklingalongside their loved ones are attempting to trigger a glad enthusiasticresponse in clients. This inspiration builds interest in an item and in theadvertisement itself. At the point when you research huge numbers of themost mutual advertisements or promotions with the most commitment you


NOTES


will find that satisfaction and inspiration are the principle subjects. You cansee this with different hardware plugs where individuals get another telephone.They are depicted as glad and excited about their telephones and theperspectives. Passionate promoting that produces delight brings individualsinto a brand.

Sadness: Advertising is not generally about interfacing with energy. In theevent that you have seen numerous advertisements you will realize that thereis a pattern of passionate substance that moves individuals to tears. Theseadvertisements are not really attempting to make a shopper dismal. All thingsconsidered, they are centred on making motivation and demonstratingindividuals what they are prepared to do. These promotions will in generalincorporate unfortunate storylines that show individuals beating obstructionsand perceives the battles that individuals face.

Surprise: Advertisers who use shock or dread are attempting to help buyerssettle on educated choices about genuine impediments. A few ads that utilizedread show the impacts of certain natural issues. The panic strategies utilizedin that sort of enthusiastic promotion are intended to get individuals togenuinely consider what is happening on the planet today and how theirdecisions have any kind of effect. Some unexpected utilized in advertising,however, isn’t dread based. It is about sure astonishments, for example,individuals getting back home in the wake of being conveyed or familiesmeeting up. You additionally observe this in vehicle ads, where vehicles areskilled to individuals. The amazement and satisfaction on their countenanceswill pull in others and help them to remember that brand or item.

Anger: Anger is utilized sparingly in enthusiastic advertising. However, it iscertainly an approach to stand out enough to be noticed. By sharing practicalcircumstances that are disturbing or inadmissible, promoters can come to ameaningful conclusion. Negative pictures and stories that are thentransformed vigorously things can get shoppers to settle on decisions abouttheir purchasing propensities.

Check Your Progress

3. What are the four parts of an emotion?4. What does functional attractive reverberation imaging (FMRI) show?

4.4 CONSUMER PERCEPTION AND ITSIMPLICATIONS

Perception is the process by which an individual selects, organizes and interpretsstimuli into a meaningful and coherent picture of the world.

NOTES


Consumer PersonalitySensation

Sensation is the immediate and direct response of the sensory organs to stimuli (anadvertisement, a package and a brand name). A stimulus can be defined as a unitof input to any of the senses. Skin, eyes, mouth, ears and nose, those that receivesensory inputs are the sensory receptors. The sensory inputs may be in the form ofsight, sound, smell, taste or touch.

The experience of sensation by an individual is known as sensitivity. It isdependent on the quality of the person’s sensory receptors as well as the intensityof the stimuli to which he is exposed. Sensation itself depends on energy change,the difference of input. Thus, a constant environment, whether very busy and noisyor relatively quiet, would provide little sensation because of the lack of change andthe consistent level of stimulation. The capacity of a person to detect changesimproves as the intensity and quantity of sensory input decreases. This ability ofhuman beings to adapt themselves to different intensities of sensitivity as externalconditions alter, not only shields him from destructive consequences, but also hasimportant connotations for the marketers.

The stimuli that a consumer receives from branding and marketing exercisesare through a number of channels. The five senses of a human being act as thechannels—sight, sound, smell, taste and touch. The inputs received from each ofthese five senses then collectively shape the perceptual process. Some forms ofinput received through marketing effort are: jingles, new flavours, softness of amaterial and so on.

Once the customer gathers any or all of these inputs, the brain formsassociations between the perception and emotions and past experiences. Basedon these associations, a customer selects a particular product or service. Forexample, the small pug used in the previously named Vodafone advertisementsrepresented to many people the loyalty and credibility that a dog represents.

Vision

Think of when you go to a mall. There are so many sights and sounds that bombardyou from all directions. However, it is scientific fact that vision is the sense that hasthe most impact and is retained the longest. So, all the posters of attractive modelswearing a certain brand of clothing, the cricketer recommending a certain brand ofcar, the film star using a specific brand of beauty cream and the intellectual lookingmale sporting a watch—all images will register in your mind and stay there in theform of associations your brain will form or even as it is. When it is time for you totake a decision about buying a product, even if it is something as routine as a tubeof toothpaste, your brain will throw up the image of Bollywood actor Shah RukhKhan recommending Pepsodent. A percentage of customers at least will take theirdecision based on this image, while some may not.


NOTES


Smell

A number of advertisements on TV show people being affected deeply by smells—both good and bad. Some examples include the aroma of good food, the fragranceof a perfume, the malodour that comes from a bathroom and so on. All theseactors will remind you of similar situations you may have been in and try to affectyour buying decision for when you find yourself in such a situation again. Forinstance, the aroma of home-cooked food made by mom may appeal particularlystrongly to young people who live alone and eat regularly from restaurants. Similarly,a well-made perfume ad may appeal to a section of the audience who are in a newrelationship or still single.

Sound

The sound stimulus has a deep impact on the human mind. For instance, an unusuallyloud sound disturbs the equilibrium of the mind, a soothing sound can act as asedative, and a melancholy song may force the listener into introspection and soon. You may remember hearing specific sounds at many different places. Forexample, a fine dining place will likely play a low, instrumental music to create aneffect of sophistication, calm and decorum. Similarly, a shopping mall may playeither a peppy number on the sound system to keep the customers’ mood upbeator play their own brand’s song to reinforce it in the customer’s mind.

Touch

This is one sense of the humans that advertisers have not been able to exploit fullyas yet because of the limitations of the various advertising mediums used. However,door to door advertising and personal selling can make use of this sense of touchto sell products like pillows, blankets, bed sheets, sweaters, jackets and so on.However, there are many advertisements, like that of Dove soap which play onthis sensory channel. Models with extraordinarily smooth skin are shown in adsselling beauty creams, moisturisers, soaps, shampoos and so on. The smoothtouch of a blanket or mattress helping a person to fall asleep instantly is also animage used very commonly in print and television media.

Taste

As far as this sensory channel goes, it has also not been fully exploited by theadvertisers. However, all of us are able to form taste-related preferences on whichultimately the buying decisions are based. A very well-known example of this isthe flavour of Maggi noodles that has been appreciated by at least 3 generationsnow. The flavour is so well-liked that other brands of instant noodles like TopRamen and Wai Wai could not make much of a mark in the market share.

The absolute threshold

Absolute threshold refers to the minimum level at which a person can sense or feela stimulus. This can also be referred to as the point at which an individual candifferentiate between the state of ‘something’ and the state of ‘nothing’. Under

NOTES


Consumer Personalityconditions of constant stimulation, such as driving through a ‘corridor’ of billboards,the absolute threshold increases (that is, the senses tend to become increasinglydulled).

Adaptation

The process of getting used to an idea or situation is commonly referred to asadaptation. Here, it might refer to particular sensations and becoming accustomedto a certain level of stimulation. One reason which makes many advertisers changetheir advertising campaigns regularly is sensory adaptation. Marketers try toincrease the sensory input in order to cut through the daily clutter consumersexperience in the consumption of advertising. Other advertisers try to attractattention by decreasing the sensory input. Some advertisers use silence (the absenceof music or other audio effects) to generate attention. Some marketers seek unusualmedia in which they place their advertisements in an effort to gain attention. Someuse scent researchers to enhance their products with a unique smell. Packagedesigners try to determine the consumers’ absolute thresholds to make sure thattheir new product designs will stand out from the competitors’ packages on theretailers’ shelves.

The differential threshold

Differential threshold refers to the least variation which can be observed betweenany two stimuli. Differential threshold is also known as the just noticeable difference(JND). Ernst Heinrich Weber, the 19th century German physiologist, observedthat the differential threshold between two different stimuli is not an infinite amount,but an amount whose intensity is influenced by that of the first stimulus. Weber’slaw states that the stronger the initial stimulus, the greater the additional intensityneeded for the second stimulus to be perceived as different. Also, an additionallevel of stimulus, equivalent to the JND, must be added for the majority of peopleto perceive a difference between the resulting stimulus and the initial stimulus.Weber’s law holds for all senses and almost all levels of intensity.

Retailers use this principle in reducing prices. Markdowns must amount toat least 20 per cent to be noticed by shoppers.

Marketing applications of JND

1. Manufacturers and marketers strive to find out the suitable JND for theirproducts so that: Negative changes, reductions or increases in the size or volume of product,

or reduced quality, are not easily recognizable for the consumers. Product improvements are readily discernible by the consumer without

being wastefully extravagant.2. Marketers use the JND to determine the amount of change or updating

required in their products to avoid losing the readily recognized aspects oftheir products.


NOTES


3. To better compete in a global marketplace that has been radically alteredby computer technology, many companies are updating their corporate logosto convey the notion that they are timely and fast-paced and at the top oftheir respective product class. Many feature some elements that conveymotion—streaking, slashing and orbiting.

4. Although some companies make minor changes (below the JND) to promotecontinuity, others have deliberately changed their traditional block letteringand dark colours in favour of script typefaces, bright colours, and hints ofanimation—taking cues from pop icons like MTV.

5. In order to emphasize or highlight the changes or improvements made to anoriginal product, the marketers strive to satisfy or exceed the differentialthreshold value of the customers.

Subliminal perception

People are also stimulated below their level of conscious awareness—they canperceive stimuli without being consciously aware of it. The threshold for consciousawareness appears to be higher than the absolute threshold for effective perception.Stimuli below the ‘limen’ of conscious awareness, too weak or brief to beconsciously seen or heard, may be strong enough to be perceived by one or morereceptor cells. This is subliminal perception.

Messages were supposedly meant for persuading people to buy goods andservices without their being aware of it. The effectiveness of the concept wastested at a drive-in theatre by flashing the words ‘eat popcorn’ and ‘drink coke’on the screen during the movie, so quickly that the audience was not aware of it.In a six-week test, the popcorn sales increased 58 per cent and the Coke sales 18per cent. No scientific controls were used, and the results were never replicated.

Subliminal Techniques

Embedding: An embedded message is one that is not immediately obvious;however, it is present and makes an impact on the mind of the consumer.An example of this is the use of ice in a photograph. Embeds are smallshapes that are included in print media ads through use of high-speedphotography or airbrushing. These hidden shapes are generally sexual innature and have been found to have a strong but unconscious impact onunknowing readers.

Auditory message: Another technique through which subliminal messagesare passed on to a target audience is use of auditory messages that areplayed quietly (undetectable by the ears) in the background of recognizedmusic. Auditory messages have been marketed to help improve one’smemory, self-esteem, and generally modify one’s behaviour for the better.Research has found that consumers spend more than $50 million everyyear on such products. An example is that of an audio clip that is left on

NOTES


Consumer Personalitywhile the target sleeps. The audio will repeat a message like ‘You are confidentand independent and you can take care of yourself.’ Such a message isbelieved to reach the mind subliminally even though the person is notconscious of it.

Consumer folklore: Another technique is that of marketing rumours, alsoknown as consumer folklore, of ungodly messages recorded backwardsinto songs. Some backward messages have indeed been found to be presenton some albums, including Led Zeppelin’s number ‘Stairway to Heaven,’which contains the lyric ‘...there’s still time to change.’ When played inreverse, this phrase sounds like ‘so here’s to my sweet Satan.’

Low-level auditory simulation: Another technique is low-level auditorysimulation, also known as ‘psycho-acoustic persuasion’, which seems tobe quite effective. Subtle acousti-cal messages such as ‘I am honest. I won’tsteal. Stealing is dishonest’ have been played on the public sound systemsin more than 1000 stores in America to prevent instances of shoplifting.However, these messages are played at a just about audible level, using atechnique known as threshold messaging. This technique was tested fornine months and registered a considerably lowered level of shoplifting cases.However, scientists feel that this technique is unlikely to work onkleptomaniacs or professional thieves.

Evaluating the effectiveness of subliminal persuasion

There is no evidence that subliminal advertising works. The current research isbased on two approaches:

The first theory is that constant repetition of very weak stimuli will haveincremental effects.

A second approach is based on sexual stimulation through sexual embeds.There is some indication that subliminal advertising may help modify antisocialbehaviour by calling for generalized behaviour change. Subliminal perception refersto the state of mind of consumers, where they are stimulated not to their level ofconscious awareness but to a level lower than it. Even though subliminal techniquesdo not have any persuasive effect on consumers’ decision-making, continuousexposure for a long period of time can influence their purchasing behaviour.

Dynamics of Perception

Human beings receive different types of stimuli at every waking moment oftheir life. Perception is not a function of sensory input alone, rather, perceptionis the result of two various types of inputs that interact to form the personalpictures—the perceptions-which every person experiences.

Physical stimuli from the outside environment, and internal stimuli based onexpectations, motives, and learning are based on previous experiences.


NOTES


As any person is different from all others in his needs, wants, desires andexpectations, it should be understood that his perceptions of stimuli willalso be different. The process of perception is characterized by the followingthree factors: selection, organization and interpretation of stimuli.o Selection: People are very choosy about the stimuli they recognize.o Organization: The recognized stimuli are then subconsciously arranged

or organized on the basis of widely held psychological principles.o Interpretation: Individuals give meaning to the recognized and

organized stimuli subjectively on the basis of their needs, expectationsand previous experiences.

Besides the nature of the stimuli, two other key factors play a role in deciding theselection of stimuli. These factors include the consumer’s earlier awareness of thestimulus. They also include the specific motives of the consumers at the time ofselection. These two factors can either enhance or reduce the probability of selectionof a particular stimulus.

The Nature of the Stimulus

Marketing stimulus contains many variables. Examples include:1. Nature of the product2. Its physical attributes3. The package design4. The brand name5. The advertisements and commercials6. The position of a print ad or commercial7. The editorial environment8. Contrast—one of the most attention-compelling attributes of a stimulus

Advertisers use extreme attention-getting devices to get maximumcontrast and penetrate the consumer’s perceptual screen.

Advertisers use colour contrasts, size, etc., to create stopping powerand gain attention.

9. Packaging is also differentiated sufficiently to ensure rapid consumerperception.

Sometimes advertisers capitalize on the lack of contrast. A technique that hasbeen used effectively in television commercials is to position the commercial soclose to the storyline of a programme that viewers are unaware they are watchingan advertisement until they are well into it. Advertisers also run print ads (calledadvertorials) which are similar to editorial contents. Advertisers also come up withthirty-minute commercials, otherwise called infomercials, which resembledocumentaries.

NOTES


Consumer PersonalityExpectations

People like to view what they expect to see. What they expect to see is usuallybased on familiarity, previous experience, or preconditioned set expectations. Thestimuli that conflict sharply with expectations often receive more attention thanthose that conform to expectations. One easy method which advertisers usuallyresort to for gaining high attention involves using sex in advertisements. In most ofthese cases, what remains in the viewer’s mind is the irrelevant sex part, ratherthan the product features or its brand name.

Motives

Human beings have the tendency to perceive stimuli which are important for them,in the process, ignoring the unrelated stimuli to a greater extent as the need becomesstronger. Thus, marketing managers give due consideration to consumers’ needswhile positioning their products.Selective perception: The consumers select different stimuli from theirsurroundings on the basis of interaction of motives and needs.Selective exposure: The end-users select those stimuli which send out pleasantmessages or messages with which they are sympathetic. They try to consciouslyavoid messages which are painful.Selective attention: Consumers have a heightened awareness of the stimuli thatmeet their needs or interests. Consumers have a lower awareness of stimuli irrelevantto their needs. Consumers differ in terms of the type of information which influencethem as well as the form of message and type of medium.Perceptual defence: Threatening or otherwise damaging stimuli are less likely tobe perceived than are neutral stimuli. Individuals unconsciously may distortinformation that is not consistent with their needs, values and beliefs.Perceptual blocking: Consumers screen out enormous amounts of advertisingby simply ‘tuning out’.

Perceptual organization

It has been observed that those stimuli which are in contrast with their surroundingsare easily taken note of by the consumers.

Gestalt psychology (Gestalt, in German, means pattern or configuration) isthe name of the school of psychology that first developed the basic principles ofperceptual organization. Three of the most basic principles of perceptualorganization are figure and ground, grouping and closure.

Figure and Ground

Stimuli that contrast with their environment are more likely to be noticed. Thesimplest example is the contrast between a figure and the ground on which it isplaced. The figure is usually perceived clearly. The ground is usually perceived as


NOTES


indefinite, hazy, and continuous. The figure is more clearly perceived because itappears to be dominant—the ground appears to be subordinate and less important.Advertisers usually plan their product advertisements with care so as to ensurethat the required stimulus is seen as figure by the consumers and not as ground.Quite frequently, we find advertisements which have no clear-cut demarcationbetween the figure and ground.

Grouping

Individuals tend to group stimuli in ‘chunks’ rather than as discrete bits ofinformation. Grouping can be used advantageously by marketers to imply certaindesired meanings in connection with their products. Most of us remember thingslike a telephone number because it can be broken into three ‘chunks’.

Closure

Individuals have a need for closure. As a result, people form a perception so thatthey see a complete picture. If the consumers are exposed to a pattern which isincomplete, they try to perceive it as complete by filling in the missing pieces.

Perceptual interpretation

Earlier knowledge or experience of a stimulus plays an important role in theinterpretation of stimuli by an individual. Thus, perceptual interpretation of stimuliis uniquely individual. Stimuli are often highly ambiguous. When the stimuli arehighly ambiguous, individuals usually take into account whether such stimuli satisfytheir personal needs.

Perceptual distortion

With respect to perceptual distortion, people are influenced by a number of stimuliwhich are likely to change their perceptions.

1. Physical appearances: Individuals have the tendency to assign qualitiesof well-known people, i.e., people who are very familiar to them, to otherswho may resemble them. We usually find that attractive models are good atbeing persuasive at a much higher level than their less-attractive counterparts.Thus, good-looking models are more adept at influencing consumers’purchasing behaviour.

2. Stereotypes: People have the tendency to carry preset notion of differenttypes of stimuli.

3. First impressions: These tend to be lasting but formed while the perceiverdoes not know which stimuli are relevant, important or predictive.

4. Jumping to conclusions: Most individuals have the tendency to draw aconclusion even before all the evidences and facts are scrutinized. Thus, assoon as they hear the beginning of an advertisement, they come to aconclusion which is usually wrong.

NOTES


Consumer Personality5. Halo effect: Describes situations where the evaluation of an object orindividual on numerous dimensions is dependent on scrutinizing just a coupleof dimensions. Consumers often evaluate an entire product line on the basisof one product within the product line. Licensing also is based on the haloeffect—associating products with a well-known celebrity or designer name.

Check Your Progress

5. What is perception?6. What is absolute threshold?7. What is JND?


1. In the study of personality, three distinct properties are of major importance: Personality reflects individual differences. Personality is consistent and enduring. Personality can change.

2. Dogmatism is a personality trait whereby people displaying it exhibitconsiderable rigidity towards traits which are contrary to their beliefs.

3. An emotion has four parts, to be specific: intellectual responses, physiologicalresponses, and social responses and influence.

4. Functional attractive reverberation imaging (FMRI) shows that whenassessing brands, customers principally use emotions (individual emotionsand encounters), instead of data (brand credits, highlights, and realities).

5. Perception is the process by which an individual selects, organizes andinterprets stimuli into a meaningful and coherent picture of the world.

6. Absolute threshold refers to the minimum level at which a person can senseor feel a stimulus. This can also be referred to as the point at which anindividual can differentiate between the state of ‘something’ and the state of‘nothing’.

7. JND is just noticeable difference. It refers to the least variation which canbe observed between any two stimuli.

4.6 SUMMARY

An individual’s personality is a unique combination of factors; no twoindividuals are exactly alike. Personality is a useful concept because it enables


NOTES


us to categorize consumers into different groups on the basis of a single traitor a few traits.

Marketers learn which personality characteristics influence specific consumerresponses and attempt to appeal to relevant traits inherent in their targetgroup.

The basic premise of Freud’s psychoanalytic theory is that human drivesare unconscious in nature but they do serve to influence consumer behaviour.

Market researchers want to understand how cognitive personality influencesconsumer behaviour. Two cognitive personality traits have been useful inunderstanding various selected aspects of consumer behaviour. They are:need for cognition; and visualizers versus verbalizers.

Materialism is a trait of people who feel their possessions are essential totheir identity. Such people are self-centred.

The term ‘customer’ implies an individual who buys merchandise andventures for individual use and the term ‘emotion’ implies a solid inclinationtowards one’s conditions, temperament, or associations with others.

Consumer Emotion is a measure of how a customer feels about hisinvolvement in an organization.

The capacity of a person to detect changes improves as the intensity andquantity of sensory input decreases. This ability of human beings to adaptthemselves to different intensities of sensitivity as external conditions alter,not only shields him from destructive consequences, but also has importantconnotations for the marketers.

The stimuli that a consumer receives from branding and marketing exercisesare through a number of channels. The five senses of a human being act asthe channels—sight, sound, smell, taste and touch. The inputs received fromeach of these five senses then collectively shape the perceptual process.

Absolute threshold refers to the minimum level at which a person can senseor feel a stimulus. This can also be referred to as the point at which anindividual can differentiate between the state of ‘something’ and the state of‘nothing’.

The process of getting used to an idea or situation is commonly referred toas adaptation.

Package designers try to determine the consumers’ absolute thresholds tomake sure that their new product designs will stand out from the competitors’packages on the retailers’ shelves.

Differential threshold refers to the least variation which can be observedbetween any two stimuli. Differential threshold is also known as the justnoticeable difference (JND).

NOTES


Consumer Personality To better compete in a global marketplace that has been radically alteredby computer technology, many companies are updating their corporate logosto convey the notion that they are timely and fast-paced and at the top oftheir respective product class.

In order to emphasize or highlight the changes or improvements made to anoriginal product, the marketers strive to satisfy or exceed the differentialthreshold value of the customers.

An embedded message is one that is not immediately obvious; however, itis present and makes an impact on the mind of the consumer.

Subliminal perception refers to the state of mind of consumers, where theyare stimulated not to their level of conscious awareness but to a level lowerthan it. Even though subliminal techniques do not have any persuasive effecton consumers’ decision-making, continuous exposure for a long period oftime can influence their purchasing behaviour.

Individuals tend to group stimuli in ‘chunks’ rather than as discrete bits ofinformation. Grouping can be used advantageously by marketers to implycertain desired meanings in connection with their products.

4.7 KEY WORDS

Personality: It is the combination of characteristics or qualities that forman individual’s distinctive character.

Stimuli: It refers to a thing or event that evokes a specific functional reactionin an organ or tissue.

Threshold: It is the magnitude or intensity that must be exceeded for acertain reaction, phenomenon, result, or condition to occur or be manifested.



1. Which three personality groups were proposed by Karen Horney?2. What are the types of traits measured in personality according to Trait

Theory?3. Which stimuli influences the people with respect to distortion?4. What are the effects of consumer emotion?


1. Explain the two cognitive personality traits that have been useful inunderstanding various selected aspects of consumer behaviour.


NOTES


2. What is subliminal perception? Describe its techniques.3. What are the dynamics of perception? Explain.4. Describe the nature of consumer emotion.







NOTES


Consumer LearningBLOCK - IICONSUMERS ATTITUDE

UNIT 5 CONSUMER LEARNINGStructure

5.0 Introduction5.1 Objectives5.2 Meaning of Consumer Learning5.3 Classical and Instrumental Theories in the Context of Consumer

Behaviour5.4 Answers to Check Your Progress Questions5.5 Summary5.6 Key Words5.7 Self Assessment Questions and Exercises5.8 Further Readings

5.0 INTRODUCTION

Learning is defined as a relatively permanent change in the behaviour that occursas a result of experience of self or others. There occurs an enhancement ofknowledge, skills and expertise which are relatively permanent. Consumer learningis defined as a process by which people gather and interpret information aboutproducts and services and use this information/knowledge in buying patterns andconsumption behaviour. As Schiffman has put it “consumer learning can be thoughtof as the process by which individuals acquire the pur-chase and consumptionknowledge and experience that they apply to future related behaviour”. Consumerlearning may be intentional, where learning is an outcome of a careful search forinformation; learning can also be incidental, where learning occurs as a matter ofchance, by accident or without much effort. Let us study in detail about theconsumer learning and various theories in the context of consumer behaviour inthe following unit.

5.1 OBJECTIVES

After going through this unit, you will be able to: Understand the concept of consumer learning Explain classical and instrumental theories with respect to consumer behaviour

Consumer Learning

NOTES


5.2 MEANING OF CONSUMER LEARNING

The process which teaches consumption and purchase knowledge to consumersthereby enabling them to apply it in future consumption-related activities is calledconsumer learning. Although popularly it is believed that learning is intentional,most learning is incidental. Reinforcement, cues, motivation and response areelements that are basic to form an understanding of the learning process.

Several points in this definition are worth noting.

First, consumer learning is a process; that is, it continually evolves andchanges as a result of newly acquired knowledge or from actual experience.Both newly acquired knowledge and personal experience serve as feedbackto the individual and provide the basis for future behaviour in similar situations.

The role of experience in learning does not mean that all learning is deliberatelysought. A great deal of learning is also incidental, acquired by accident orwithout much effort. The term ‘learning’ encompasses the total range oflearning, from simple, almost reflexive responses to the learning of abstractconcepts and complex problem solving.

Most learning theorists recognize the existence of different types of learning andexplain the differences through the use of distinctive models of learning. Despitetheir different viewpoints, the learning theorists, in general, agree that in order forlearning to occur, certain basic elements must be present—motivation, cues,response and reinforcement.

Motivation

Motivation is based on needs and goals. The degree of relevance, or involvementwith the goal is critical to how motivated the consumer is to search for informationabout a product. Uncovering consumer motives is one of the prime tasks ofmarketers who try to teach the consumer segments why their product will bestfulfil their needs.

Cues

If motives serve to stimulate learning, cues are the stimuli that give direction to themotives. In the marketplace, price, styling, packaging, advertising and store displaysall serve as cues to help consumers fulfil their needs. Cues serve to direct consumerdrives when they are consistent with their expectations.

Response

How individuals react to a cue—how they behave—constitutes their response. Aresponse is not tied to a need in a one-to-one fashion. A need or motive mayevoke a whole variety of responses. The response a consumer makes depends

NOTES


Consumer Learningheavily on his previous learning; that, in turn, depends on how related responseswere reinforced previously.

Reinforcement

Reinforcement increases the likelihood that a specific response will occur in thefuture as the result of particular cues or stimuli.

Check Your Progress

1. Define consumer learning.2. Name the basic elements that must be present in order for learning to

occur.

5.3 CLASSICAL AND INSTRUMENTAL THEORIESIN THE CONTEXT OF CONSUMERBEHAVIOUR

The behavioural learning theories are sometimes called stimulus–response theories.A person is said to have ‘learned’ when his/her response to a recognized stimulusis predictable. Behavioural theories are most concerned with the inputs andoutcomes of learning, not the process.

Two theories relevant to marketing are classical conditioning and instrumental(or operant) conditioning.

(i) Classical Conditioning

All organisms were regarded by the early theorists of classical conditioning aspassive recipients. Conditioning involved building automatic responses to stimuli.Ivan Pavlov was the first to describe conditioning and to propose it as a generalmodel of how learning occurs. According to Pavlov, if a stimulus when paired withanother one elicits a response that is known and serves to reproduce it when usedon its own, it becomes a case of conditioned learning. To demonstrate his theories,Pavlov used hungry dogs that were eager for food. At the sound of a bell Pavlovpresented the dogs with the sight of meat causing them to salivate. The processwas repeated a number of times. It reached a point when the dogs began tosalivate at the sound of the bell itself, i.e., even in the absence of meat.

In the consumer behaviour context, an unconditioned stimulus might consistof a well-known brand symbol (e.g., the Microsoft ‘Windows’ icon) that impliestechnological superiority and trouble-free operation (the unconditioned response).Conditioned stimuli might consist of new products bearing well-known symbols.

Consumer Learning

NOTES


Strategic applications of classical conditioning

Classical conditioning gives rise to three basic concepts: stimulus generalization,repetition and stimulus discrimination.

(a) Repetition works by increasing the strength of association and by slowingthe process of forgetting. After a certain number of repetitions, retentiondeclines. This effect is known as advertising wearout and can be decreasedby varying the advertising messages. Wearouts may be avoided by varyingthe message through cosmetic variation or substantive variation. Some donot agree about how much repetition is needed. The three-hit theory statesthat the optimum number of exposures to an advertisement is three—one,to make the consumer aware of the product; two, to show the consumersthe relevance of the product; three, to remind them of its benefits.The scale of competitive advertising that a consumer is exposed to decidesthe extent to which repetition will prove to be repetitive. As exposureincreases, the potential for interference increases.

(b) According to classical conditioning theorists, learning depends both on theability of individuals to generalize and on repetition. Success of imitations inthe marketplace can be explained with the help of stimulus generation. Itworks by exposing how consumers confuse imitations with the originalproducts. To take advantage of such erroneous recognitions, privatemanufacturers package their products in such a way that it resembles thoseof the national brands. This principle can be applied by marketers to categoryextensions, product forms and product lines. As mentioned earlier, productextension involves the addition of a new product to a trusted and knownbrand. This reassures its approval by the consumers.In product line extensions, the marketer adds related products to an alreadyestablished brand, knowing that the new product is more likely to be adoptedwhen it is associated with a known and trusted brand name. Conversely, itis much more difficult to develop a totally new brand. Marketers offerproduct form extensions that include different sizes, different colours, andeven different flavours. Product category extensions generally target newmarket segments.The success of this strategy depends on a number of factors. For example,if the image of the parent brand is one of quality, the consumers are morelikely to bring positive associations to the new category extensions.

Family branding: This is the practice whereby a company’s entireline of products is marketed under the same brand. It capitalizes onthe consumer’s ability to generalize favourable brand associations fromone product to the next. Retail private branding often achieves thesame effect as family branding. For example, Wal-Mart used toadvertise that its stores carried only ‘brands you trust’. Now, the name

NOTES


Consumer LearningWal-Mart itself has become a ‘brand’ that consumers have confidencein, and the name confers brand value on Wal-Mart’s store brands.

Licensing: Often, a well-known brand name is affixed to productsthat are manufactured by someone else. As a marketing strategy thisworks on the principle of stimulus generalization. Corporations alsolicense their names and trademarks, usually for some form of brandextension, where the name of the corporation is licensed to the makerof a related product and thereby, enters a new product category.Municipal and state governments have begun licensing their names toachieve new sources of revenue. The Vatican Library licenses its namefor a variety of products from luggage to bed linens. Producingcounterfeits has become a big business with the increase in licensing.Regardless of control and quality, licensors add well-known names toall types of products.

(c) Stimulus discrimination is the opposite of stimulus generalization. Here, aspecific stimulus is selected from a number of stimuli that are similar.Positioning strategy is based on the ability of the consumer to discriminateone stimulus from another. This seeks to establish a unique image for abrand in the consumer’s mind. The key to stimulus discrimination is effectivepositioning, a major competitive advantage. The image, or position, that aproduct or service has in the mind of the consumer is critical to its success.Unlike the imitator who hopes that consumers will generalize their perceptionsand attribute special characteristics of the market leader’s products to theirown products, the market leaders wish that the consumer is able to see thedifference in each stimuli. Product differentiation strategies are thereforededicated to designing valuable, relevant and meaningful attributes for thenso that their product would be distinguished from those of their competitor.

It is often quite difficult to unseat a brand leader once stimulus discrimination hasoccurred. In general, the longer the period of learning—of associating a brandname with a specific product—the more likely the consumer is to discriminate,and the less likely to generalize the stimulus. Stimulus discrimination, repetition andstimulus generalization are the three principles of classical conditioning which helpexplain consumer behaviour. They form the theoretical underpinnings of variousmarketing applications.

(ii) Instrumental Conditioning

Like classical conditioning, instrumental conditioning requires a link between astimulus and a response. However, in instrumental learning, the stimulus that hasbeen learned is the one which results in the most suitable response. Instrumentallearning theorists view learning as a trial and error process with habits shapedbecause of rewards received for certain responses or behaviour.

Consumer Learning

NOTES


Although classical conditioning is useful in explaining how consumers learnvery simple types of behaviour, instrumental conditioning is more helpful in explainingcomplex, goal-directed activities. According to American psychologist, B. F.Skinner, most individual learning occurs in a controlled environment in whichindividuals are ‘rewarded’ for choosing an appropriate type of behaviour.

In consumer behaviour terms, instrumental conditioning suggests thatconsumers learn by means of a trial-and-error process in which some types ofpurchase behaviour results in more favourable outcomes (i.e., rewards) than othertypes of purchase behaviour. A favourable experience is instrumental in teachingthe individual to repeat a specific type of behaviour. Like Pavlov, Skinner developedhis model of learning by working with animals.

Viewed in the context of marketing, consumers who try several brands(say, for example, of skirts) before settling on the one that fits them the best (positivereinforcement) are engaging in instrumental learning.

Reinforcement of behaviour

Skinner distinguished two types of reinforcement (or reward) influence whichprovided that the likelihood for a response would be repeated. The first type,positive reinforcement, consists of experiences that fortify the likelihood of a specificresponse. Negative reinforcement is an unpleasant or negative result. It encouragesa specific kind of behaviour at all times. Appeals to fear in advertisement messagesare examples of negative reinforcement. Both reinforcements, positive and negative,can elicit the response that is desired. Negative reinforcement should not be confusedwith punishment, which is designed to discourage behaviour.

Forgetting and extinction—when a learned response is no longer reinforced,it diminishes to the point of extinction; that is, to the point at which the link betweenthe stimulus and the expected reward is eliminated. Forgetting is often related tothe passage of time; this is known as the process of decay. Marketers can overcomeforgetting through repetition and can combat extinction through the deliberateenhancement of consumer satisfaction.

Strategic applications of instrumental conditioning

The objective of all marketing efforts should be to maximize customer satisfaction.Apart from the experience of using the product itself, consumers can receivereinforcement from other elements in the purchase situation, such as the environmentin which the transaction or service takes place, the attention and service providedby employees, and the amenities provided. Some hotels provide reinforcement toguests in the form of small amenities. Most frequent shopper programmes arebased on enhancing positive reinforcement and encouraging continued patronage.

Relationship marketing: Developing a close personalized relationshipwith customers is another form of non-product reinforcement.

NOTES


Consumer Learning Reinforcement schedules: Marketers have found that the product qualitymust be consistently high and provide customer satisfaction with each usefor the desired consumer behaviour to continue. They have identified threetypes of reinforcement schedules: total (or continuous) reinforcement,systematic (fixed ratio) reinforcement, and random (variable ratio)reinforcement.Shaping refers to the reinforcement of behaviour that must be performed

by consumers before the desired behaviour can be performed. Shaping increasesthe probability that a certain desired consumer behaviour will occur.

Massed versus distributed learning: Timing has an important influence onconsumer learning. Should a learning schedule be spread over a period of time(distributed learning), or should it be ‘bunched up’ all at once (amassed learning)?The question is an important one for advertisers planning a media schedule becausemassed advertising produces more initial learning, although a distributed scheduleusually results in learning that persists longer. When advertiser’s want an immediateimpact (e.g., to introduce a new product or to counter a competitors blitz campaign),they generally use a massed schedule to hasten consumer learning. When the goalis long-term repeat buying on a regular basis, however, a distributed schedule ispreferable. A distributed scheduler with advertisements repeated on a regular basis,usually results in a more long-term learning and is relatively immune to extinction.

Modelling or Observational Learning

Learning theorists have noted that a considerable amount of learning takes placein the absence of direct reinforcement, either positive or negative, through a processpsychologists call modelling or observational learning (also called vicarious learning).They observe how others behave in response to certain situations (stimuli), theensuing results (reinforcement) that occur, and they imitate (model) the positively-reinforced behaviour when faced with similar situations.

When individuals pick up behavioural patterns by observing others they areundergoing a process called modelling. In such cases role models are usually peoplethey think highly of for traits such as skill, appearance and accomplishment. Childrenlearn much of their social behaviour and consumer behaviour by observing theirolder siblings or their parents. Advertisers recognize the importance of observationallearning in their selection of models, whether celebrities or unknowns. Sometimesadvertisements depict negative consequences for certain types of behaviour. Thisis particularly true of public policy advertisements, which may show the negativeconsequences of smoking, fast driving, or taking drugs.

Check Your Progress

3. What are the three basic concepts in classical conditioning?4. What is shaping?

Consumer Learning

NOTES



1. The process which teaches consumption and purchase knowledge toconsumers thereby enabling them to apply it in future consumption-relatedactivities is called consumer learning.

2. In order for learning to occur, certain basic elements must be present—motivation, cues, response and reinforcement.

3. Classical conditioning gives rise to three basic concepts: stimulusgeneralization, repetition and stimulus discrimination.

4. Shaping refers to the reinforcement of behaviour that must be performedby consumers before the desired behaviour can be performed. It increasesthe probability that a certain desired consumer behaviour will occur.

5.5 SUMMARY

Consumer learning is a process; that is, it continually evolves and changesas a result of newly acquired knowledge or from actual experience. Bothnewly acquired knowledge and personal experience serve as feedback tothe individual and provide the basis for future behaviour in similar situations.

If motives serve to stimulate learning, cues are the stimuli that give directionto the motives. In the marketplace, price, styling, packaging, advertisingand store displays all serve as cues to help consumers fulfil their needs.Cues serve to direct consumer drives when they are consistent with theirexpectations.

A person is said to have ‘learned’ when his/her response to a recognizedstimulus is predictable. Behavioural theories are most concerned with theinputs and outcomes of learning, not the process.

Two theories relevant to marketing are classical conditioning and instrumental(or operant) conditioning.

Corporations also license their names and trademarks, usually for someform of brand extension, where the name of the corporation is licensed tothe maker of a related product and thereby, enters a new product category.

Stimulus discrimination is the opposite of stimulus generalization. Here, aspecific stimulus is selected from a number of stimuli that are similar.Positioning strategy is based on the ability of the consumer to discriminateone stimulus from another. This seeks to establish a unique image for abrand in the consumer’s mind.

Skinner distinguished two types of reinforcement (or reward) influence whichprovided that the likelihood for a response would be repeated. The first

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Consumer Learningtype, positive reinforcement, consists of experiences that fortify the likelihoodof a specific response. Negative reinforcement is an unpleasant or negativeresult. It encourages a specific kind of behaviour at all times.

The objective of all marketing efforts should be to maximize customersatisfaction. Apart from the experience of using the product itself, consumerscan receive reinforcement from other elements in the purchase situation,such as the environment in which the transaction or service takes place, theattention and service provided by employees, and the amenities provided.

Shaping refers to the reinforcement of behaviour that must be performedby consumers before the desired behaviour can be performed. Shapingincreases the probability that a certain desired consumer behaviour will occur.

When individuals pick up behavioural patterns by observing others they areundergoing a process called modelling. In such cases role models are usuallypeople they think highly of for traits such as skill, appearance andaccomplishment.

5.6 KEY WORDS

Consumer learning: It is the process by which individuals acquire thepurchase and consumption knowledge and experience they apply to futurerelated behaviour.

Conditioning: It is the process of training or accustoming a person or animalto behave in a certain way or to accept certain circumstances.

Reinforcement: It refers to the process of encouraging or establishing abelief or pattern of behaviour.



1. What is the role of experience in learning?2. What is classical conditioning? Explain with the help of example.3. What is family branding?4. Differentiate between massed learning and distributed learning.5. What is modelling learning?


1. Discuss the strategic applications of classical conditioning.2. Describe instrumental conditioning in the context of consumer behaviour.

Consumer Learning

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Consumer Attitude

UNIT 6 CONSUMER ATTITUDEStructure

6.0 Introduction6.1 Objectives6.2 Meaning of Attitude

6.2.1 Attitude: Functions6.2.2 Tri-Component Attitude Model6.2.3 Katz’s Model of Attitude

6.3 Attitude Change6.4 Answers to Check Your Progress Questions6.5 Summary6.6 Key Words6.7 Self Assessment Questions and Exercises6.8 Further Readings

6.0 INTRODUCTION

Attitudes can be inferred from the manner in which an individual behaves. Theycan not be seen and nevertheless it is crucial that attitudes are measured. This isbecause an individual with a positive attitude towards a goods or service is morelikely to make a purchase. Attitudes can be determined by observation, qualitativestudies and quantitative techniques (or rating scales). Attitudes are formed after alearning process. The formation of attitudes can be described through behaviouraltheories (classical conditioning, operant conditioning), cognitive learning and sociallearning. While attitudes are formed as a result of learning, they are affected byvarious sources such as self-experiences, as well as direct and indirect influences.Direct influences are influences from family and friends, salespersons (directmarketers) as well as dealers and indirect influences include influences via massmedia, either print or audio-visual. This unit also deals with the Katz’s model ofattitude and attitude change. Let us study the concept of consumer attitude and itsrelevance in a purchase decision making in the following unit.

6.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of functions of consumer attitude Explain the cognition, affect and conation components of attitudes Describe the Katz’s model of attitude

Consumer Attitude

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6.2 MEANING OF ATTITUDE

It is one of the most frequently involved behavioural science concepts in marketing.Krech, Crutchfield and Ballachey describe an attitude as a person’s enduringfavourable or unfavourable cognitive evaluations, emotional feelings, and actiontendencies toward some object or idea. People have attitudes toward almosteverything: religion, politics, clothes, music, food, and so on. Attitudes put them ina frame of mind of linking or disliking an object, moving toward or away from it.

While its relationship to behaviour is not entirely clear, attitude and likelyfuture action has resulted in extensive use of attitude surveys in the area of newproduct development and in the design and execution of many promotionalcampaigns. Similarly, public opinion (belief or attitudes) is playing an increasingrole in shaping and modifying corporate policy in areas such as consumer protection.It follows that a basic understanding of the current state of knowledge of attitudetheory is vital to the student of marketing in general and particularly consumerbehaviour.

There is no single agreed definitions of attitude. In broad terms most of thedefination of attitude fall into one of two categories which reflect affective-conative(CAC) and expectancy-value (EV) models. The CAC model has been tracedback to Plato’s elements of the human soul—reasonable, spirited, appetitive-whichin more modern terms may be defined as the realms of thought, emotions, andmotives, or knowing, feeling, and acting. Marketers have developed a number ofvariants of their own of the CAC model and some of the better known examplesare contained in Table 6.1 under the general heading of hierarchy-of-effects models.

Table 6.1 Hierarchy-of-effects models

Strong AIDA Lavidge and Rogers Engel, KollatSteiner and Blackwell

Conative Action Purchase Adoption PurchaseMotive conviction trial processesAffective Desire Preference Evaluation Evaluation &(emotion) interest linking interest SearchCognitive Awareness Knowledge Awareness Problem(thought) awareness recognition

Unawareness

In all the marketing versions, starting with Stronger’s AIDA (1924) andprogressing through Lavidge and Steiner (1961). Rogers (1962) to Engel, Kollatand Blackwell (1968), it is assumed that one proceeds from awareness (cognitive)to preference (affective) to action (conative) – an assumption of the direction ofcause and effect for which there is little empirical support. In fact it is widelyrecognised that frequently one or more stages occur simultaneously, e.g., awarenessand evaluation, while impulse purchases suggest that the cognitive and affective

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Consumer Attitudemay occur together and that the conative may, or may not, follow. Despite thesedeficiencies the CAC model enjoys wide support, and the effectiveness of marketingstrategy is often measured in terms of its ability to move consumers up the hierarchyof effects, i.e., from unawareness to awareness, to act. The EV model viewsattitude as comprising two components – beliefs and values-which are broadlyequivalent to the cognitive and affective dimensions of the CAC model. It followsthat the EV model is lacking a behavioural or action element and so is much morelimited in its application.

The EV model is particularly associated with the work of Martin Fishbein,who built upon the work of Rosenberg, when in turn was developed from FritzHeider’s consistency model. In essence Fishbein argues that an attitude comprisestwo components – beliefs about the attributes of an object and the values ascribedto these beliefs.

In order to maintain consistency (or balance, or congruity), as it is sometimescalled) consumers need to act in accordance with their beliefs and the valuesassociated with them. Thus, while EV models do not seek to establish a link betweenattitude and behaviour the association between expressed beliefs and action isstrong where action occurs, i.e., beliefs experienced about different brands havebeen found to be good predictors of actual brand preference, where the personexpressing a belief about a product and a willingness to buy. Because of this, theEV model is theoretically more acceptable than the CAC model, which extendsthe link between an attitude as a predisposition to act into behaviour withoutspecifying the catalyst which makes action necessary. From a practical point ofview this missing link is of crucial importance in converting the results of attitudesurveys into realistic sales forecasts.

Attitude clusters The tripartite (C-A-C) model of attitude maintains thatattitudes are unlikely to exist in complete isolation. Robertson, Zielinski, and Wardpropose the view that ‘an individual’s cognitions about music, for example, maytend to relate to cognitions about entertainment or relaxation. Therefore, attitudesas a whole are thought to form clusters with consonant attitudes within theindividual’s attitudinal system.

Attitude measurement Attitude research is undertaken to analyse thebehaviour and motivations of people as consumers. Most research of this type isundertaken using quantitative methods as a result of the great complexity of humanbehaviour.

Attitude measurement is the assignment to each individual of a numericalscore indicating where he falls on the particular attitude dimension (any factor,positive or negative, on which an attitude is based) on the basis of inferencesdrawn from the responses of the individual to statements directly related to thatobject or idiom that is the focus of the study (i.e., the attitude object). Measurement‘therefore’ is an open and direct reaction to the statements included within theattitude scale (desire for measuring attitudes, consisting of a set of statements or

Consumer Attitude

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items to which the individuals responds) giving a numerical score of the strength ofbeliefs, feeling, and inclination to take action in a given situation such as towards aproduct range, a brand name, a marketing practice, etc.

It is evident that a person’s purchase choice is the result of the complexinterplay of cultural, social, personal, and psychological factors. Many of thesefactors cannot be influenced by the marketer. They are useful, however, inindentifying the buyers who might have the more interest in the product. Otherfactors are subject to marketer influence and give clues to the marketer on how todevelop product, price, place, and promotion to attract strong consumer response.

6.2.1 Attitude: Functions

Attitudes can be classified into four functions: Utilitarian Function Ego-defensive Function Value-expressive Function Knowledge Function Utilitarian Function: Consumers usually view a commodity favourably if

it has been valuable earlier. Marketers should emphasize its useful featuresand suggest such uses of the commodity which should not be too apparent.

Ego-defensive Function: These are products that are purchased by theconsumers in order to boost their confidence and guard their self-image.

Value-expressive Function: Quite often, a consumer’s personal valuesare articulated with the help of brands bought by them. Marketers try torelate their products with this significance.

Knowledge Function: It is very natural for a consumer to want to knowthe people they come in contact with and the products they buy. Often,strategies to position a product or brand are developed around this ‘needto know.’

6.2.2 Tri-Component Attitude Model

Tricomponent Attitude Model accords that attitudes have three major components:cognition, affect and conation.Cognitive component: Cognitions refers to previous knowledge or experienceswith or about an object. This previous knowledge/experience allows the consumerto form perceptions or beliefs about the product. This component comprisesrational judgements, beliefs, and perceptions related to various aspects of theobject. For instance, Amul butter has good taste, it is easily available, it is reasonablypriced, etc.

NOTES


Consumer AttitudeAffective component: This component is based on buyer's emotion or approach.Explorer continuously consider these sentiments and thoughts as evaluative in nature.Emotionally-charged states, such as sadness and happiness, articulate affect-ladenexperiences. These states may enhance positive or negative experiences for theconsumer. Consumer researchers try to measure this element using global evaluativemeasures. An emotional component relates to the object. For instance, Amul butterbeing an integral part of breakfast while growing up, or remembering good timesthat were enjoyed while eating it, etc.Behavioural component: The possibility of a consumer behaving in a differentway or act in a typical manner is considered by conation. The conative componentmight as well as think the real behaviour. Marketing and consumer research treatsit as an articulation of the consumers’ purchase intentions. The likelihood that aconsumer will buy a particular product or that he will act in a certain way is assessedusing the intention-to-buy scale. It refers to the intention or likelihood of acquiringthe object when required. For instance, when buying butter next time, how likelyis the customer to buy Amul butter?

It is important to remember that any of the beliefs may or may not befactually accurate. But, these are beliefs held by the customer that hethinks are true.

Also, cognitive and affective components of the attitude can be held forvarious parts of the object, though the affective component must beheld for the entire object. This follows from the fact that the intention tobuy must be for the entire object, not for parts of it.

The more positive the cognitive and affective components of the attitude,the more likely is the customer to purchase or use the object. Therefore,attitudes are consistent with the types of behaviour.

6.2.3 Katz’s Model of Attitude

As per psychologist Daniel Katz and his Functional Theory of Attitudes, attitudesencourage social conduct; they are utilitarian for the individual and are controlledby an individual’s thought processes. Practical attitude hypothesis (FAT) proposesthat convictions and mentalities are powerful to different mental capacities.Mentalities can be persuasive on numerous cycles, for example, being utilitarian(helpful), social, identifying with values, or a decrease of intellectual discord. Theycan be useful and assist individuals with communicating the world. In the last partof the 1950s when therapy and behaviourism ruled as the foci of mentalexaminations, Smith, Bruner, and White (1956) and Katz (1960) independentlyand autonomously created typologies of human attitudes comparable to thecapacities to which they accepted the attitudes served. This hypothesis recommendsthat attitudes are held by people since they are significant and fundamental tomental working. The capacity of a mentality is a higher priority than whether theattitude is exact or right. As per Katz, Consumers can have various purposes

Consumer Attitude

NOTES


behind having a similar attitude. A business-like methodology that centres on howattitudes encourage social conduct; mentalities exist since they serve some capacityfor the individual: utilitarian, esteem expressive, personality cautious, informationcapacity and social changed attitude.

Utilitarian attitudes: Many attitude serve a utilitarian capacity by servingto enhance remunerates and limit the disciplines accomplished from objectsin the climate. The models of utilitarian attitude are consequentialisthypotheses: that which makes right acts is their results. It alludes tospeculations of right activity though the correct demonstration to pick inany circumstance is the one that will accomplish the most elevated equilibriumof delight over agony for every influenced being. At the point when nodemonstration is accessible to which will create net delight, the demonstrationwhich is correct will deliver the most un-net agony. A person with a utilitarianmentality is worried about how an item will help with improving their personalsatisfaction.

Social-adjustive attitudes: Social-adjustive capacities are those whichmanage connections and empower people to ascend the social steppingstool through outward shows of status which are guessed to make theindividual more appealing or famous according to esteemed gatherings. Aperson with a social-adjustive disposition is worried about status, notoriety,and how they are seen by others and will look for objects that help withbuilding up their ideal social picture. Attitude serving a social-adjustivecapacity elevate the ability to interface with proper social gathering individualsor to dazzle appealing others. Attitude may frequently serve differentiatingcapacities for individuals who contrast in self-checking. High self-checkingpeople ordinarily endeavour to tailor their conduct to the social or relationalnecessity of the circumstances they experience, to find a place with others,along these lines inferring that they may regularly hold attitudes that serve asocial-adjustive capacity.

Value expressive attitudes: The most hard to conceptualize and influence,esteem expressive capacities aid the outward articulation of inborn qualities.A few attitudes are significant to an individual since they articulate convictionsthat are characteristic for that individual’s self-idea. The disposition is,therefore, “essential for what their identity is” and the outflow of that mentalityconveys significant things about that individual to other people. Worthpertinence as a sign of the apparent utility of a disposition to accomplish anideal end-state. It is an immediate proportion of the connection between aworth and a disposition, as opposed to a proportion of the declaration ofattitude that are connected to individual qualities. Focusing on worthexpressive correspondence of a disposition instead of worth importancepermits correspondence conduct to become the dominant focal point in

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Consumer Attitudethinking about the connection between qualities, attitude, and practices.Worth expressive attitudes fill no direct outward need, and can be bestperceived as existing to fulfil a person’s need to feel special and consistentwith self. People with esteem expressive attitude are not worried about alot other than being consistent with themselves.

Ego-defensive attitudes: Ego-defensive capacities serve to shield theperson from both interior and outer repulsiveness. It permits individuals totry not to acknowledge unpalatable or shocking parts of self or of the outsideworld. It can advocate rationing one’s own confidence. An ego-defensiveattitude, in which one’s disposition is held to shield oneself from underminingor unfortunate facts.

Knowledge attitudes: The fifth capacity, i.e., information, helps people inunderstanding their general surroundings. People with an information attitudelook to comprehend events out of the longing to know, not on the groundsthat it is quickly pertinent to their requirements, but since they basicallyneed to comprehend. Attitudes that serve an information work helpindividuals pick up more noteworthy comprehension of the structure andactivity of their reality. The world that individuals possess is amazingly intricate,and that attitude may encourage sorting out that world without serving needsother than comprehension.

6.3 ATTITUDE CHANGE

Attitudes are general assessments of articles, thoughts, and individuals oneexperiences for the duration of one’s life. Attitudes are significant in light of the factthat they can manage thought, conduct, and emotions. Mentality change happenswhenever an attitude is altered. Hence, change happens when an individual goesfrom being positive to negative, from marginally sure to positive, or from having noattitude to having one. Due to the useful estimation of attitudes, the cycles thattransform them have been a significant concentration since the commencement ofsocial brain science.

Attitude Change

As indicated by double cycle models of mentality, changes are as per the following:(1) Those that happen when one invests moderately minimal psychological

energy,(2) Those that happen with generally high psychological exertion. The measure

of thought and exertion utilized in some random circumstances is dictatedby numerous factors, all of which influence one’s inspiration or capacity tothink.

Consumer Attitude

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Attitude changes can occur by following techniques: Self-observation: This hypothesis contends that when we have no (or an

exceptionally feeble) earlier existing attitude on a specific issue we can gatherour attitudes from noticing our own practices. In the event that we return alost wallet, we construe that we are straightforward. Regularly, our conductis moulded by unpretentious weights around us, however we neglect toperceive those weights. Thus, we erroneously accept that our conduct exudedfrom some internal manner. Maybe we aren’t especially dependable andrather restored the wallet to dazzle the individuals around us. However,neglecting to understand that, we derive that we are spotless legit. By havingconfidence in our conduct, we gather that we are straightforward and thattruly rolls out an improvement in our past un-trust-commendable attitude.Self-observation hypothesis gives the most acknowledged clarification ofthe Foot-in-the-Door impact. Consistence to the underlying solicitation isset to lead us to induce that we like to be ‘useful’. That rolls out a genuineimprovement to be ‘useful’ in our attitude. This method is usually utilized bythe salesmen, and it is likewise utilized to build consistence with demandsmade by altruistic associations, similar to Red Cross.

Cognitive discord: This hypothesis contends that acting in a way thatnegates existing attitudes makes a sensation of distress. For instance, acreature sweetheart may feel upset in the event that he incidentally runsover a feline. So that, individuals will be propelled to attempt to determinethis discord. Individuals will search for approaches to attempt to clarify itand, if none are clear, they will turn to determine the error: they will changetheir attitude so it coordinates the conduct they have performed.

Persuasion: While intellectual disharmony takes place due to attitude changethrough an inner inconsistency. This hypothesis of influence proposes thatindividuals can adjust their mentalities. To begin with, they can be roused totune in and consider the message, along these lines prompting an attitudemove. Or on the other hand, they may be affected by qualities of the speaker,prompting an impermanent or surface move in mentality. Messages that areprovocative and that appeal to rationale are bound to prompt lasting changesin mentalities.

Central Route: Message understanding is portrayed by smart thought of thesubstance of the message.Peripheral Route: Message understanding is portrayed by thought of sourceand related general data instead of the message itself.

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Consumer Attitude

Fig. 6.1 Attitude Change

Learning Theory: Classical moulding, operant moulding, and observationallearning can be accustomed to achieve disposition change. Old style moulding canbe utilized to make good enthusiastic responses to an item, individual, or occasionby partner good sentiments with the objective article. Operant moulding can beutilized to reinforce attractive attitudes and debilitate unfortunate ones. Individualscan likewise change their attitudes in the wake of noticing the conduct of others.

Check Your Progress

1. What are three major components of attitudes according to TricomponentAttitude Model?

2. Which factors does the cognitive component comprise?3. What is a person with a social-adjustive disposition worried about?4. What purpose do ego-defensive capacities serve to an individual?


1. Tricomponent Attitude Model accords that attitudes have three majorcomponents: cognition, affect and conation.

2. The cognitive component comprises rational judgements, beliefs, andperceptions related to various aspects of the object.

3. A person with a social-adjustive disposition is worried about status, notoriety,and how they are seen by others and will look for objects that help withbuilding up their ideal social picture.

4. Ego-defensive capacities serve to shield the person from both interior andouter repulsiveness. It permits individuals to try not to acknowledgeunpalatable or shocking parts of self or of the outside world.

Consumer Attitude

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6.5 SUMMARY

Attitudes can be classified into four functions – utilitarian function, ego-defensive function, value-expressive function and knowledge function.

Tricomponent Attitude Model accords that attitudes have three majorcomponents: cognition, affect and conation.

Cognition refers to previous knowledge or experiences with or about anobject. This previous knowledge/experience allows the consumer to formperceptions or beliefs about the product. This component comprises rationaljudgements, beliefs, and perceptions related to various aspects of the object.

Affective component is based on buyer’s emotion or approach. Explorerscontinuously consider these sentiments and thoughts as evaluative in nature.Emotionally-charged states, such as sadness and happiness, articulate affect-laden experiences. These states may enhance positive or negativeexperiences for the consumer. Consumer researchers try to measure thiselement using global evaluative measures.

As indicated by double cycle models of mentality, changes are as per thefollowing:

(1) Those that happen when one invests moderately minimal psychologicalenergy,

(2) Those that happen with generally high psychological exertion. Themeasure of thought and exertion utilized in some random circumstancesis dictated by numerous factors, all of which influence one’s inspirationor capacity to think.

As per psychologist Daniel Katz and his Functional Theory of Attitudes,attitudes encourage social conduct; they are utilitarian for the individual andare controlled by an individual’s thought processes. Practical attitudehypothesis (FAT) proposes that convictions and mentalities are powerful todifferent mental capacities. Mentalities can be persuasive on numerous cycles,for example, being utilitarian (helpful), social, identifying with values, or adecrease of intellectual discord.

Social-adjustive capacities are those which manage connections andempower people to ascend the social stepping stool through outward showsof status which are guessed to make the individual more appealing or famousaccording to esteemed gatherings.

The fifth capacity, i.e., information, helps people in understanding their generalsurroundings. People with an information attitude look to comprehend eventsout of the longing to know, not on the grounds that it is quickly pertinent totheir requirements, but since they basically need to comprehend.

NOTES


Consumer Attitude6.6 KEY WORDS

Consumer attitude: Consumer behaviour is the study of individuals, groups,or organizations and all the activities associated with the purchase, use anddisposal of goods and services, and how the consumer’s emotions, attitudesand preferences affect buying behaviour.

Cognition: It refers to previous knowledge or experiences with or aboutan object.



1. Give classification of attitudes into its functions.2. Write a brief note on the techniques which change attitude.


1. Explain the components of attitudes according to the Tricomponent AttitudeModel.

2. Describe the Katz’s model of attitude.







Post Purchase AttitudeChange

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UNIT 7 POST PURCHASEATTITUDE CHANGE

Structure7.0 Introduction7.1 Objectives7.2 Cognitive Dissonance Theory7.3 Attribution Theory7.4 Answers to Check Your Progress Questions7.5 Summary7.6 Key Words7.7 Self Assessment Questions and Exercises7.8 Further Readings

7.0 INTRODUCTION

The activities and experiences that a consumer encounter after making a purchaseare included in the post purchase behaviour. At times, after making a purchase,consumers experience post-purchase dissonance, i.e., they regret their decisionof the purchase made. It mainly occurs due to a large number of alternativesavailable, good performance of alternatives or their attractiveness. The marketerssometimes need to assure the consumer that the choice made by them is the rightone. The seller can mention or even highlight the important features or attributesand benefits of the product to address and solve their concerns if any. A high levelof post-purchase dissonance is negatively related to the level of satisfaction whichthe consumer draws out of product usage. To find out the exact reason of theconsumer’s dissonance, the marketer uses attribution process. This unit deals withthe dissonance theory and the attribution process in context of consumer behaviour.Let us study in detail about these topics.

7.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of dissonance Explain the process of attribution

7.2 COGNITIVE DISSONANCE THEORY

When we are faced with a choice and we opt for one, we still have some regretsabout what we did not choose. There are times we do or say things against our

NOTES



own convictions. Both these are examples of conditions that create feelings ofdiscomfort caused by conflicts between various beliefs/attitudes that we hold.Sometimes the conflict arises due to the inconsistency between attitudes andbehaviour; for example, some people love animals, but still are non-vegetarians.

Dissonance is the struggle a person experiences when inconsistencies occurbetween attitudes that we hold, or between our attitudes and actions. Dissonancecan be seen as a motivational state. Individuals experiencing dissonance aremotivated to reduce it, also, it produces a feeling of discomfort. There are threeways in which dissonance can be reduced and they are as follows:

(i) Change your attitudes and/or behaviour, to make them consistent; forexample, being married to a person, one does not like. Change the attitudetowards the partner and start believing that she/he is not unlikable or walkout of the marriage. Both these processes would lead to reduction in theconflict.

(ii) Obtain or recruit new information that supports one’s attitude or behaviour;for example, thinking, ‘Compared to my friends’ married life, my partnershipis indeed tolerable,’ or so many of my friends have divorced and ended abad marriage. So there is nothing wrong about divorce.’

(iii) Minimize the importance of the conflict. For example, ‘I have lived for twenty-five years with someone whom I do not like. For the rest of my life, theseconflicts do not matter. I will manage, somehow.’One of these three ways would reduce the dissonance and bring in a sense

of balance. The theory of cognitive dissonance was proposed by Leon Festingerin 1957.

Change of one or both attitudes are needed for reducing dissonance. Changefollows the path of least effort, as in other situations. Psychologists, Aronson,Fried and Stone (1991) carried out a series of studies involving forced compliance.This involved getting people to do or say something they did not believe in. Theyused health related issues for inducing hypocrisy or lying, like safe sex. A group ofparticipants had to encourage others to practice these responsible sexual behaviour.Simultaneously, they were reminded that they themselves have not always practicedwhat they are now advocating. This would generate dissonance. This can bereduced by changing their attitudes about safe sex. This was revealed when 85per cent of these participants bought contraceptive devices the next time theyengaged in sex. This reduced their lying hypocritical attitude besides their actions.

Psychologist, Aronson and Mills gave subjects in two conditions, large andsmall rewards for engaging in behaviour that was counter to their held attitudes.The experiment consisted of two sets of female college students. One group hadto undergo a severe embarrassment test to join the group. The other set of womenwere put through a milder test of embarrassment. Finally, the members of both thegroups were told that they cleared the test and were allowed to join. The severely


NOTES


embarrassed group seemed to enjoy the task for which they enrolled with difficulty.The other group that went through milder difficulties to enter the group did not findthe task that they were ultimately to perform much to their liking. The tasks thatboth the groups had to perform were dull and uninteresting.

The severely initiated group had a lot of dissonance because of the followingtwo inconsistent attitudes that they held:

(i) Underwent a severe initiation(ii) Had to perform a dull task, at the end

The severely embarrassed group changed their attitude towards the task,and perceived it as not so boring after all. In this way, the dissonance was reduced.The mildly initiated group had less dissonance because the intensity of the twoattitudes (mentioned earlier) that they held was low.

In this condition, the dissonance was less, so they did not have any motivationto change their attitude towards the task, they were required to perform. Hence,they were able to view the task as dull because they put less into the situation. Sopeople, who suffer more, justify it by thinking that they like what they have. In reallife also one gets to see knowledge rewards lead people to believe that they likewhat they are doing. People working in corporate offices, that are demanding andleave little or no time for personal life, justify their lives (as the incentives are good)on the ground that they enjoy their work hours, lifestyle, etc. Here, the attitude ischanged, so as to reduce the conflict that could arise by not having time or leisurefor self or family.

Psychologist, Festinger and Carlsmith (1959) carried out a study in whichthey gave one group of subjects a small reward ($1) and another group ($20) fortelling other participants—who were to come to participate in the study—that thetasks to do were interesting. In reality the task was a boring routine one likeputting spools in a tray, taking them out and putting them back. This had to bedone for half an hour.

Later, both sets of participants were asked to indicate their own liking forthe tasks. This involved outright lying. The group that received $1 to lie, reportedliking the task more than the group that was paid $20. This was because theformer group had more dissonance as they had to lie for a small amount, while thegroup that was paid more justified their lying in terms of their larger reward. Theless paid group had experienced more dissonance. So they had to change theirattitude towards the dull task and perceive it as not so uninteresting in order overcometheir dissonance.

Less leads to more effect was demonstrated by this study. More attitudinalchange comes when one has received a small reward. The smaller the inducements,the greater the change in attitude. However, these predictions are valid only whena free choice condition exists. People, who have to accept smaller salaries because

NOTES



of limited opportunities, are not going to change their attitudes towards the workthey have to engage in.

Does inconsistency really cause dissonance? Cooper and Schier (1992)are of the opinion that dissonance and the motivation to reduce it, primarily comesfrom feelings of responsibility for negative outcomes. So when people are told thattheir attitude-discrepant behaviour does not lead to harmful effects, lesser attitudechange occurs, like lying helps someone, but does not harm others.

If there is no dissonance, there is no possibility of attitude change. We stillbelieve that lying is bad, but not when we do it under special circumstances (witha view to helping someone). When people recognize that their different attitudesor attitudes and behaviour do not fit together neatly, some discomfort or pressureto change arises. This is reduced in several ways to obtain a reduction in thefeelings of unpleasantness.

Check Your Progress

1. What is dissonance?2. Who proposed the theory of cognitive dissonance?

7.3 ATTRIBUTION THEORY

The attribution theory was propounded by psychologist, Fritz Heider and can beused to observe how people observe their behaviour and of other people. It isprimarily concerned with how people interpret events and their thought process.However, Weiner and his colleagues developed a theoretical framework whichhas become a major paradigm in the field of social psychology. The theory comprisesof three-stage process: (1) an individual must perceive other’s behaviour, (2) heor she must believe that the way in which they behaved was intentional and (3)they must then, analyse whether their behaviour was forced or not.

The Process

The attribution process refers to the manner in which people come to understandthe cause of others’ (and their own) behaviour (Harvey and Wells 1988). Attributionsplay an important role in the process of perception. Attributions made about thereasons for someone’s behaviour may affect judgements about that individual’sfundamental characteristics and traits.

Individuals do not consciously make attributions in all circumstances (althoughthey may do so unconsciously much of the time). However, under certaincircumstances, people are likely to make causal attribution consciously. Attributiontheory has been proposed to develop an explanation of how we judge peopledifferently depending on the meaning we attribute to a given behaviour (Kelley1971). When we observe a person’s behaviour, we ascribe its cause either to


NOTES


internal factors or to external factors. If the behaviour is a result of internal factors,it is under the control of the person. If the cause is external, it is the result of theintensity of the situation faced by the person.

Figure 7.1 presents a basic model of the attribution process. People infer‘causes’ to behaviours they observe in others and these interpretations often largelydetermine their reactions to these behaviour. The perceived cause of behaviourreflects several antecedents: (1) the amount of information the perceiver has aboutthe people and the situation and how that information is organized by the perceiver,(2) the perceiver’s beliefs (implicit personality theories, what other people mightdo in a similar situation), and (3) the motivation of the perceiver (for example, theimportance to the perceiver of making an accurate assessment).

Fig. 7.1 The Attribution Process

Consequences for the Perceiver

The perceiver’s information and beliefs depend on previous experience and areinfluenced by the perceiver’s personality.

Based on information, beliefs, and motives, the perceiver often distinguishesbetween internal and external causes of behaviour; that is, whether the behaviouris due to a real desire or the pressure of circumstances. The assigned cause of thebehaviour—whether internal or external—helps the perceiver attach meaning tothe event and is important in understanding the subsequent consequences for theperceiver. The consequences of this attribution process are the subsequentbehaviour of the perceiver in response to the behaviour of others, the impact onfeelings and emotions (how the perceiver now feels about the events, people, andcircumstances) and the effects on the perceiver’s expectations of future events orbehaviour. This could be discussed with the help of a simple example.

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Suppose an employee reports late to office on a particular day. His or hertardiness can be attributed to either internal or external causes. He or she mighthave been late as a result of watching a late-night movie and, therefore, not beingable to wake up in the morning on time, which is an internal cause within theperson’s control. Another reason could be being caught up in a traffic jam and,therefore, not being able to reach on time, which is an external cause not under theperson’s control.

Internal Versus External Causes of Behaviour

A central question in the attribution process concerns how perceivers determinewhether the behaviour of another person stems from internal causes (such aspersonality traits, emotions, motives, or ability) or external causes (other people,the situation, or chance). A widely accepted model by Harold Kelley attempts toexplain how people determine why others behave as they do (Kelley 1971). Thisexplanation states that in making attributions, people focus on three major factors.

Consistency

The extent to which the person perceived behaves in the same manner as on otheroccasions when faced with the same situation. In the example discussed above, alot would depend upon the number of times the person has shown that behaviour.If this behaviour (of coming late) is repeated on a number of occasions, it is areflection of consistency in his behaviour. It could be contrasted with a personwho comes late only on odd occasions. The more consistent the behaviour of theperson, the more likely it is to be ascribed to internal causes.

Distinctiveness

It is the extent to which the person perceived acts differently in different situations,that is, whether it is usual or unusual. If an employee has an excellent attendancerecord and is an effective performer in the organization, his coming late or beingabsent from the job could be ascribed to external factors that are not under hiscontrol. However, if the behaviour appears to be usual, that is, he has a habit ofbeing late or absenting him or her very often, it could be ascribed to internalcauses that are under his personal control.

Biases

The fundamental attribution bias reflects one’s tendencies to attribute anotherperson’s behaviour to his personal characteristics, as opposed to situational factors.This bias causes the perceiver to ignore environmental forces that often significantlyaffect the behaviour. For example, people have a tendency to believe that anindividual’s criminal behaviour is because of the inherent dishonesty or a personalityflaw rather than due to environmental factors such as unemployment, broken family,or maltreatment during an early age.


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Self-serving Bias

The self-serving bias represents one’s tendency to take more personal responsibilityfor success rather than for failure. Referring to the earlier discussion, employeestend to attribute their success to internal factors (high ability or hard work) andtheir failure to uncontrollable external factors.

Errors

The most common attribution error is our tendency to explain an individual’sbehaviour which is based on various internal factors such as personality of theconcerned person. It may also be based on external factors such as situationswhich affect the concerned person.

Check Your Progress

3. What does the fundamental attribution bias reflect?4. What is the most common attribution error?


1. Dissonance is the struggle a person experiences when inconsistencies occurbetween attitudes that we hold, or between our attitudes and actions.

2. The theory of cognitive dissonance was proposed by Leon Festinger in1957.

3. The fundamental attribution bias reflects one’s tendencies to attribute anotherperson’s behaviour to his personal characteristics, as opposed to situationalfactors.

4. The most common attribution error is our tendency to explain an individual’sbehaviour which is based on various internal factors such as personality ofthe concerned person.

7.5 SUMMARY

Dissonance is the struggle a person experiences when inconsistencies occurbetween attitudes that we hold, or between our attitudes and actions.Dissonance can be seen as a motivational state. Individuals experiencingdissonance are motivated to reduce it, also, it produces a feeling ofdiscomfort.

If there is no dissonance, there is no possibility of attitude change. The attribution process refers to the manner in which people come to

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understand the cause of others’ (and their own) behaviour (Harvey andWells 1988). Attributions play an important role in the process of perception.Attributions made about the reasons for someone’s behaviour may affectjudgements about that individual’s fundamental characteristics and traits.

People infer ‘causes’ to behaviours they observe in others and theseinterpretations often largely determine their reactions to these behaviour.

The perceiver’s information and beliefs depend on previous experience andare influenced by the perceiver’s personality. Based on information, beliefs,and motives, the perceiver often distinguishes between internal and externalcauses of behaviour; that is, whether the behaviour is due to a real desire orthe pressure of circumstances.

The fundamental attribution bias reflects one’s tendencies to attribute anotherperson’s behaviour to his personal characteristics, as opposed to situationalfactors. This bias causes the perceiver to ignore environmental forces thatoften significantly affect the behaviour.

7.6 KEY WORDS

Dissonance: it is the lack of agreement or harmony between people orthings.

Attribution: it is the action of regarding something as being caused by aperson or thing.

Bias: It refers to the inclination or prejudice for or against one person orgroup, especially in a way considered to be unfair.



1. What are the methods to reduce dissonance?2. State the antecedents reflected by the perceived cause of behaviour.


1. Describe the studies carried out by the psychologists, Aronson, Fried andStone, that involved forced compliance and also their conclusion.

2. Explain the process of attribution.3. Illustrate the consequences of the attribution process for the perceiver with

the help of example.


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MarketingCommunicationUNIT 8 MARKETING

COMMUNICATIONStructure

8.0 Introduction8.1 Objectives8.2 The Process of Communication

8.2.1 Noises or Barriers to Communication Process8.3 Introduction to Marketing Communication

8.3.1 Types of Marketing Communication8.3.2 Principles of Communication8.3.3 Source, Message and Medium Factors8.3.4 Consumer Behaviour: Perspective and Advertising Response Process

8.4 Information Processing: Attention, Comprehension and Recall8.5 Two-Step Flow of Communication: Opinion Leaders8.6 Answers to Check Your Progress Questions8.7 Summary8.8 Key Words8.9 Self Assessment Questions and Exercises

8.10 Further Readings

8.0 INTRODUCTION

Marketing communication is the transmission of information from the marketer tothe consumer through media. The main objective of marketing communication isto make a consumer aware about the product/service offering, build a favourableattitude towards the offering and to encourage the purchase. The components ofmarketing communication are sender, receiver, message and media. Thecommunication process is initiated by the sender, who is also referred to asthe source. In the context of marketing management and consumer behaviour, thesender may be formal or informal. Once the sender has decided what he wantsto communicate, he encodes the information into a message to be transmitted tothe receiver. The sender needs to think of his message strategy, i.e., what to say,how to say it logically and symbolically, and who is to say. Thus, the message isillustrative not only of the information content, but also includes a physical formatthrough words (verbal communication), symbols, pictures and images (visualcommunication) and gestures (non-verbal communication). Feedback is animportant component in the communication process. It is the receiver’s responseto the sender, i.e., the consumer’s response to the marketer’s message. Today,people are easily influenced by the opinions while making a purchase. The peoplewho influence others are called opinion leaders. Opinion leadership is the leadershipby an active media user who interprets the meaning of media messages or contentfor lower-end media users. Typically the opinion leader is held in high esteem by

MarketingCommunication

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those who accept their opinions. Let us elaborate on the marketing communicationprocess and the opinion leader in the following unit.

8.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of marketing communication Explain the various methods of communication Describe the stages of processing of consumer information Discuss the consumer processing and hedonic experiential models of

marketing communication State the characteristics and the methods of identification of opinion leaders

8.2 THE PROCESS OF COMMUNICATION

‘The process of communication is implicit in the way a society functions. It is, infact, integral to the existing and prevailing social norms which guide the everydaylife of the individuals living in that society.’

Communication is a process that involves a series of actions and a numberof factors to transmit a message from one end to another. It would be good foryou if you look for the examples of communication around and then work outvarious steps of this process. Let us think of normal conversations we do everynow and then. Think and analyse what happens when one is thirsty and wants aglass of water to quench the thirst. The person in question in this case is the senderof a message which is formulated in a language which the receiver of that messageunderstands. If the language is English the message prepared could be a sentencelike ‘give me a glass of water please!’ This is sent through a medium and thecommunication is considered as complete if the receiver of the message gives aglass of water to the originator of the message. In this case the action of giving thewater would be the feedback.

Sometimes the act of communication becomes difficult as there are manypeople talking to each other and in spite of talking loud to the extent of shoutingmay not reach the ears of the selected respondent. It is said that the noise in thechannel has not allowed the communication to take place and as a result the receiverof the message has not reacted in the manner desired by the speaker.

The process of communication possesses certain dynamism and goes throughvarious phases. Given below is a description of these phases.

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Fig. 8.1 The Communication ProcessSource: http://www.mbaknol.com/business-communication/process-of-communication/

1. The sender has an idea

It is very hard to think of someone ‘trying to make common’ to communicate, ifthat individual has not anything to share. Still, the belief that the sender must possessan idea to begin the communication process is a misconception because everythingpeoples do and everything they are communicates something to others. Theobjective of this phase is to begin the process at the moment the sender intentionallydecides to send a message to someone, i.e., the sender possesses an idea.

2. The sender encodes the idea

We do not possess the telepathic skills. We are not in a position to transmit ideasfrom our brain to others’ brains. However, human beings have learned the skills totransmit symbols as the representations of their ideas and thoughts. Such symbolsare varied in nature and content. The people use a variety of symbols to conveytheir thoughts and ideas. Such symbols have evolved linguistically (verbal or written)to develop into sophisticated languages. There are many types of languages: theBraille language, the Morse code, the American Sign Language, and all the spokenand dead languages world over. Apart from this, there are other symbols that areused to communicate: paintings, pictographs, traffic signals, zip codes, mathematicalformulas, hieroglyphs, baseball gestures conveying instructions from managers toplayers, etc.

The expression ‘TREE’ written on a blackboard is not a tree in reality, noris the picture of a tree a tree in fact. These are but the agreed representations ofsome reality. It is obviously the sender’s responsibility to select a code best capableof carrying the message. While encoding one’s idea, the individual should choosethe code which will suit the message thus allowing the receiver to understand itcompletely. So we can say that the sender encodes the message.

3. The sender transmits the message

To suitably transmit the encoded message, the sender is required to select a channelor a medium to send the message. The information can be sent verbally ornonverbally by the sender. The messages are sent with the help of the tone ofvoice, gestures and the use of space in nonverbal communication. On the other


NOTES


hand, the messages are conveyed through speeches or documents in verbalcommunication. Hence the messages are sent through different media liketelephones, computers, videocassettes, DVDs, CDs, papers, faxes, radios, etc.However, few channels are more suitable for some messages in comparison toothers. For instance, a five-page memo is not a good choice for a lunch invitation.The particular characteristics of all the mediums somewhat decide their capabilityto serve a particular objective. Such characteristics explain the richness andsuitability of a particular medium. A rich medium can:

convey a message using more than one kind of clue (visual, verbal or vocal), facilitate feedback, and establish personal focus.

The face-to-face conversation is the richest medium. Such conversationsenable the receiver to receive the sender’s message verbally (i.e., the spokenwords), nonverbally (i.e., gestures and the facial expressions) and vocally (i.e.,voice tone or the pace of the speech). In face-to-face conversations, there isimmediate feedback from the receiver. They also enable the sender to take controlof few of the environmental noises as well. Such conversations can be personalizedby the sender to all the receivers concerned.

Apart from the richness, the chosen medium should be evaluated for othercharacteristics as well. The speed of the medium might be a criterion for its selection.For instance, the quickness of a message prepared on a particular medium (formalletter versus memo) or delivered (snail mail versus email) can be the criterion toopt for that medium. One of the criteria for a medium’s choice is its ability to bepermanently kept. The reason to pick a particular medium is also dependent uponwhether the record of a message can be kept on it or not (email versus 3M note).The medium’s other criteria comprise its:

feedback capacity (letter versus telephone conversation), ability to convey the intensity or the sophistication of a message (formal

written report versus casual conversation), level of formality (formal letter versus email), and level of confidentiality (fax versus sealed hand-delivered letter).

The sender should also choose the medium capable of efficiently andeffectively conveying the message. While selecting a media, one should opt for theone capable of conveying the message appropriately to the target audience. Hencethe sender transmits the message.

4. The receiver gets the message

Unless he/she is suffering from a hearing problem or he/she is distracted by noisesdistorting the receiving of the message, the receiver gets the signal sent by thesender.

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5. The receiver decodes the message

The receiver decodes the message with the use of his/her knowledge of the codethat has been used to encode the message. If the receiver has a poor knowledgeof the language that is used, he/she is likely to decode the message inappropriately.Also, a receiver putting an effort to decode conflicting nonverbal and verbalmessages is likely to incorrectly decode the intended message. The receiver selectsthe code he/she is going to use for decoding the message. Selecting the wrongcode is similar to use a wrong key—the message may not open its secret if thewrong code is used. The receiver will select a code on the basis of his/herbackground and environment. The receiver possesses the accountability to choosethe right code for decoding the message. Basically, the receiver also has to listento the sender. Hence the receiver decodes the message.

6. The receiver sends feedback to the sender

With the use of the same phases as the sender, the receiver sends a message backto the sender. It provides information on his/her level of understanding of themessage. This message is called the feedback. Feedback may be classified intotwo types - immediate feedback and delayed feedback. Immediate feedback isthe type of feedback where the learners do not have to wait to receive the feedbackas they receive it immediately. However, areas where feedback generation requiresdeep assessment may take some time to be produced. This kind of feedback istermed as delayed feedback. This feedback can be used to improve performancein the future.

8.2.1 Noises or Barriers to Communication Process

All through the process of communication, unintended interferences take place.These distort or interrupt the process. Such interferences are known as ‘noises’.These may be real noises, i.e., auditory stimuli such as people talking, phonesringing or jack-hammering street workers. Other noises comprise distractions suchas a streaker running across a stage. Noises create distortions as well. We are yetto come across communication without noises. Hence, finding out the sources ofnoise and making an effort to minimize its effect are necessary to improve thecommunication efficiency. Noise may be classified into four types - physical,psychological, physiological and semantic. Physical noise is the noise that isproduced externally while the speaker and listener are trying to communicate. Forexample, a song being played in another room or the noise of construction in theneighbourhood. Psychological noise is the one that interferes with communicationtaking place between two people because one of them is not attentive to thecommunication, and is mentally absent. Any physiological problem such as aheadache or body pain can make it difficult for a listener to concentrate on thecommunication. This is termed as physiological noise. Semantic noise takes placewhen there is no shared meaning in a communication. This may happen when the


NOTES


speaker is using a particular jargon or parlance that is not understandable by thelayman listener.

Fig. 8.2 The Elements involved in the Process of Communication

Source: http://www.mbaknol.com/business-communication/elements-of-the-communication-process/

Check Your Progress

1. What are a marketer’s primary communications tools?2. What are demonstration centres?3. What is communication in context of marketing?4. Name the social attributes possessed by different opinion leaders.

8.3 INTRODUCTION TO MARKETINGCOMMUNICATION

Customers go through a complex chain of mental events from the time they see orhear an advertisement until they decide to make or not make a purchase. Formarketing communication to succeed, two processes must take place in thecustomers’ minds. First, what the customers saw, heard, learned, thought, or feltwhile exposed to the advertisement must be processed and stored in memory,and second, this stored information in customer minds must be retrieved at thecrucial moment when a customer faces a purchase decision. For an advertisementto be successful, a customer must have the motivation, the ability, and theopportunity to process and store the information in the advertisement and retrievethe information when the customer is about to make a purchase decision. Therefore,the customer exposed to an advertisement must be interested in the advertisement,knowledgeable enough to understand it, and free from distractions of other stimuli.Also the mental processes must occur with sufficient intensity or effort, and mustbe focused towards the advertised brand.

NOTES



Because the chain of events that marketing communications must stimulateis so complex, a wide variety of communication methods have to be used. Thismeans using the whole range of communication methods—advertising, publicity,sponsorship, and sales promotion. Or it may mean using several advertising mediaor different avenues within one media. The idea is to get the message across to thecustomers in a forceful way so that he is able to process the message and store it.Relying on a single source is dangerous as the customer may just miss the messageunless he is in a state of heightened awareness, because he wants to make apurchase decision, and is actively scouting for brands in the category that theadvertised brand belongs to.

Companies that rely solely on television advertising face the problem ofcustomers not being able to connect an advertisement with the brand it promotes.This particularly happens with advertisements that customers find engrossing. Sincethe intensity of customers’ involvement in the advertisement is high, their entirefocus is on processing and storing the interesting set up, message or storyline in theadvertisement, and they miss the name of the advertised brand. Viewers oftenassociate very popular advertisements with some other competitor brand of thesame category. The company thus ends up promoting a rival brand. Viewersmistakenly attributed a popular advertisement for Eveready Energizer batteries toDuracell—Eveready’ main competitor. In such situations, customers process andstore the advertisement with sufficient intensity but in the wrong direction. A secondcommunication method, if used, will set the direction right. So a packaging whichuses the images of the advertisement, or a radio advertisement which uses thejingle, music, or the message of the television advertisement will help the customersretrieve the message and link it to the advertised brand.

Companies frequently use less expensive radio or print advertisement toreinforce expensive television advertising. The main vehicle is television advertisingand hence the total campaign becomes expensive. But a reverse sequence canalso achieve the same purpose. Television advertisements can be used to supplementradio or print advertisements. Since the staple promotion vehicles will be the lessexpensive radio and print advertisements, the total campaign cost would be lesserbut the effectiveness would be same or even more.

Marketers want the attention of the customers in their target market.Customers are largely ignoring unsolicited advances from marketers. Customersare facing pressures from more urgent quarters of life and it would be naïve tobelieve that they would be willing recipients of whatever marketers have to tellthem through their promotional efforts. The customer’s attention is at premiumand marketers will have to understand the customer’s psychobiology of attentionto be able to get their messages across to him.

People are hardwired to fight for survival. If marketers want customers toact in a certain manner they will have to tell consumers the consequences oftheir not acting in that particular manner. If a retailer wants consumers tobuy during a sales promotion, he should clearly communicate the difference


NOTES


in price between during sales and after sales period. And this differenceshould be big enough to get the consumer thinking about the amount ofmoney he will lose if he does not buy now. Marketing communication shouldforce the consumer to think for himself and take action in self defense. If acompany is launching a new or an improved product, it should let consumersknow the consequences of not owning that product. Marketingcommunication can become scary but if a company is running ‘true’ sales orit has launched a ‘genuine’ new product, it should want its consumers tobenefit from these. But if the threat does not turn out to be real even once,consumers will forever stop trusting the company’s communications. Noperson will take kindly to being scared for nothing.

People are naturally competitive. People play games to win the trophy. Ifthere was a trophy for everyone, most of us would not be interested in agame. Make your product hard to get. Communicate that not everyone canhave your product even if they want to, because the company has a limitednumber of products which it will sell in a limited time frame. Ensure publiccompetition for your product. Advertise a short sales period and a steepprice decline. Advertise a new product launch with a deadline date forpurchase. A company can devise games for their advertisements andwebsites, and tempt customers to play them for the rewards offered onwinning.

Do not let distractions cloud the main message. A company’s multiplemessages from multiple vehicles will draw less than optimum customerattention on each one of them. Consumers reserve limited attention for acompany’s message and if this is spread too thin over many messages,attention on any one of them will not reach the threshold to prompt anaction. A company should be running one core message at any one time. Ifa company is running an advertisement campaign for a new product launch,it cannot be running a sales promotion scheme or publicizing some act ofgood corporate citizenship simultaneously. A company should decide theresponse it wants to elicit from its customers and design and run anappropriate dominant message to get the desired response. The conventionalwisdom of inundating customers with multiple messages from multiple vehiclesin the hope that at least some will stick, does not work. Nothing sticks.

People want to feel engaged. One the most important factors for gainingand sustaining attention is engaging people’s emotions. Plain advertisementwill never engage customers. The product and messages about it shouldhave more relevance than the benefits it provides. The messages could beabout issues which are of interest to the consumers. If the company uses acelebrity to endorse its products, the celebrity should be personally interestedin some cause that the consumers are interested in. Independent of thethemes running in advertisements, companies can promote causes dear toits customers. The idea should be to form some sort of a joint endeavourbetween the company and its consumers to help the cause.

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An unambiguous, single signal to the target customers

Some of the independent and separate groups may work for a company in orderto ensure the achievement of the overall objectives of a campaign being initiatedby the company. This is especially true for bigger campaigns such as new productlaunches wherein a company may designate different agencies to play differentroles. For examples, different agencies may work on the different aspects of acampaign such as direct marketing, trade related activities, consumer promotions,mass campaigns, Internet marketing, etc. These agencies are completely responsiblefor the overall tasks performed by them and they may be able to ensure thesuccessful conduct of their independent tasks and responsibilities. However, evenwhile working together on a campaign, they may still not be able to ensure asuccessful launch for the company. The efforts can also directly undermine eachother. For instance, a company can run an advertising campaign to build brandawareness and differentiate its offering, but it may also run a direct mail programmefocused on generating responses and hence sending discount couponsindiscriminately.

A systems approach should be adopted by the marketing managers in orderto avoid any wastage and in such an approach some element may be compromisedto achieve the overall objectives. Therefore if the company wants to build a brandby differentiating itself, it will refrain from sending discount coupons. Theperformance of the direct mail programme may be compromised but theperformance of the campaign as a whole will improve. But the groups will notagree to compromise on their individual performances. It is important to appoint aknowledgeable person who has a thorough knowledge about the different aspectsof a given marketing campaign. This person understands the overall objective ofthe campaign, has knowledge of all the marketing disciplines that are involved inthe campaign and has powers to guide and curtail the activities of the individualgroups.

This person constitutes a small marketing team and goes about directingvarious groups in a way as to maximize value from the campaign. Each marketingdiscipline has a goal in relation to other disciplines and also in relation to the overallobjective of the campaign. The objective of the campaign is more likely to beachieved if various groups work in coordination, rather than independently, underthe guidance of the marketing team.

8.3.1 Types of Marketing Communication

Marketers are inundating customers with e-mails, phone calls, and direct mailingbut when customers actually require help from them, they are normally not available.Companies at many given times may waste their time in brainstorming andresearching on issues like who should be targeted and what should be thecommunication message. In the process, they may actually ignore the right timingfor communicating with their customers.


NOTES


The right time of communication with the customers is extremely important.The companies cannot simply blindly go ahead with the marketing activities schedule.Rather the marketers must assess the reaction of the customers to a particularsituation and then they should accordingly decide the timing of the communication.This is important as customers must relate with the communication message andthe advertising campaign therein in order to fulfill their needs.

Companies can also indulge into dialogues or two-way communication withthe customers. This is extremely interactive mode of communication. This type ofcommunication generally takes place over an extended period of time. This involvesa number of multiple channels. For example, after a customer has made a purchase,thereafter he may be contacted by the company through a direct mailer, apersonalized email or call from the company salesperson and thus a dialogue or atwo-way communication may set in place between the company and the customer.At times, the customer may not respond to the company’s communication, thenautomatically the system will get the message and the adequate steps will be takensuch as the salesperson will be alerted to contact the customer again or a reminderemail will be sent to the customer, etc.

Dialogues are an important means of communication through which thecompanies can win back their lost customer, can also anticipate defections andinduce the customers to ensure greater purchases. The customers’ time is valuableand they do not take kindly to companies wasting their time by feeding theminformation that they do not value at that point. It is important for the companies toreach out to their customers at the right time, this is because customers may rejectsomething when it is the wrong time to approach them while they may accept thesame thing when the companies approach at the right time.

Non-traditional methods of communication

A marketer’s primary communications tools are media advertising, direct mailadvertising, telephone selling, trade shows, and personal selling. The cost permessage is lowest for advertising and highest for personal selling. Telephone andpersonal selling offer flexibility in tailoring the message to the target prospect but ata substantial cost. Marketers have to be content with mixing and matching thesetools to get a synergistic effect. Emergence of new communication tools hasenhanced the ability of marketers to develop a more integrated, tailored, andcost-effective communication programme.

National account management

A few large customers account for a disproportionately large part of any company’ssale in both consumer and industrial markets. A team headed by a national accountmanager is made responsible for understanding and serving the needs of these bigspenders and maintaining profitable relationships with them. The national accountmanager is responsible for coordinating people who work in other divisions of theseller company, or in other functional areas so that the customer needs are served

NOTES



well. The national account manager is able to understand the requirements of hiscustomer because of his long and focused association with him and therefore canoffer the most suitable products and services to him.

Demonstration centres

These are specially designed showrooms that allow customers to observe and tryout complex products. A variant of the approach is a travelling demonstrationcentre in which the equipment for sale is mounted on a trailer truck. They providea competition-free environment for selling process.

Industrial stores

When the sale is too small to justify sales calls, customers are asked to travel tothe company’s stores. The stores also serve as demonstration centres. Stores arepermanent, but the same concept is used by companies that present customerseminars and demonstrations in hotels, trade shows, and other temporary facilities.

Telemarketing

It has been in vogue for long but it has recently received new impetus as acommunication method. Companies are using telemarketing to solicit orders fromcustomers, to listen to customer grievances, to solve customer problems, and toinform customers of the company’s new offerings. Software gadgets are beingused in conjunction with telemarketing which enables the company to respondimmediately to customers’ requests and queries.

8.3.2 Principles of Communication

There are primarily three principles of communication: Simplicity: There should be simplicity in conveying thoughts. In other words,

simple and easy to understand common words should be chosen forcommunication. This enables the listener to get the same message as youwould like to give him because it is easy to understand.

Clarity: There should be clarity in both - thoughts and expressions. A clearthought with carefully chosen words conveys the desired meaning to thelistener. It helps him to understand easily.

Brevity: Communication message should always be brief. It should coverall vital points. It should be short enough to cover all important points butlong enough in providing benefits. Then it is attractive.

The chief ingredient for enhancing the effectiveness of communication is Empathy.Empathy is at the core of the communication. Empathy means putting oneself inthe shoes of the other person and to have feeling of the other person. Anycommunication with empathy will always bring people closer and will go a longway in developing a harmonious relationship.


NOTES


The effectiveness of any marketing communication depends upon theinterpersonal relationship. In other words, effectiveness of relationship dependsupon the relationship between the communicator and the receiver. Thus,effectiveness of any marketing communication is directly proportional to thisinterpersonal relationship that a marketer is able to develop with his customers.

Communication is nothing but the flow of the information from sender to thereceiver so that a commonality of thought can be achieved between the two parties.In context of marketing, this refers to the correctness in perception developed bythe customer based on the communication message of the marketer while he isadvertising for his products. Sound waves may be bouncing against the listener’seardrums, but he is not actively receiving and thinking about what the salespersonis saying. An analogy can be drawn between a human receiver and a TV set. A TVis continuously bombarded by electromagnetic waves from different stations, yetit will only receive the station to which the channel selector is tuned. Humanreceivers are also bombarded with stimuli from many sources and like a TV set,people are selective in what information they choose to process.

In order for the communication process to flow smoothly, both the senderand the receiver need to participate actively in the communication process in orderto achieve the desired results. Communication is something one does with anotherperson, not something one does to another person. The right question is not ‘Whatdoes advertising do to people?’ but rather ‘What do people do with advertising?’

8.3.3 Source, Message and Medium Factors

As mentioned earlier, all communication activities involve eight elements:1. A source2. Encoding3. A message4. A channel (medium)5. A receiver6. Decoding7. Possibility of noise8. Feedback potential

The source or sender is a person or groups of people (business firm) who havethoughts, (ideas, sales points) to share with some other person or groups of people.The source encodes a message to accomplish the communication objective.Encoding is the process of translating thoughts into symbolic form. The sourceselects specific signs from an infinite variety of words, sentence structures, symbolsand non-verbal elements to encode a message that will communicate effectivelywith the target audience. The message is a symbolic expression of the sender’sthoughts. In marketing communication, the message takes the form of an

NOTES



advertisement, sales presentation, package design, point of purchase cues and soon. The message channel is the path through which message moves from the sourceto the receiver. Companies use broadcast (radio and television) and print(newspaper, magazines) media to advertise messages to current and potentialcustomers. Messages are also transmitted to customers directly via sales people,by telephone, direct mail, brochures and point of purchase displays.

The receiver is the person or group of people with whom the sender attemptsto share ideas. In marketing communication, receivers are prospective and presentcustomers of an organization’s product or service.

Decoding involves activities undertaken by receivers to interpret or derivemeaning from marketing messages.

A message moving through a channel is subject to the influence of extraneousand distracting stimuli. These stimuli interfere with the reception of the message inits pure and original form. Such interference and distortion is called noise. Noisemay occur at any stage in the communication process. At the point of messageencoding, the sender may be unclear about what the message is intended toaccomplish. A likely result is a poorly focused and perhaps even contradictorymessage rather than a marketing that is clear cut and integrated. Noise also occursin the message channel—a fuzzy TV signal, a crowded magazine page in which anadvertisement is surrounded by competitive clutter and a personal sales interactionthat is interrupted repeatedly by telephone calls. Noise can also be present at thereceiver/decoding stage of the process. An infant might cry during a TV commercialand block out critical points in the sales message; passengers in an automobilemight talk and not listen to a radio commercial; or the receiver simply may notpossess the knowledge base needed to fully understand the promotional message.

The feedback affords a source of monitoring how accurately the intendedmessage is being received. Feedback allows the source to determine whether theoriginal message hit the target accurately or whether it needs to be altered toevoke a clearer picture in the receiver’s mind. The feedback mechanism offers thesource some measure of control. Advertisers frequently discover that their targetmarket does not interpret campaign themes exactly as intended. Using research-based feedback from their market, the management can re-examine and correctineffective or misdirected advertising messages.

8.3.4 Consumer Behaviour: Perspective and Advertising ResponseProcess

A fundamental understanding of consumer behaviour is essential to fully appreciatethe intricacies of marketing communication. It is important to understand howconsumers respond to marketing communication stimuli and make choices amongbrands.

Advertisers are looking for greater accountability from their communicationcampaigns. The advertising budget can be one of the biggest expenditures for an


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organization. So, managers want to see how their budgets are translating intoresults. Also, markets for all products are becoming increasingly fragmented.Competition is also intensifying in several product categories. These powerful forcesleave less margin of error for marketers. Advertisers must know the best audiencesfor any product, where these audiences obtain information about products, howthey respond to different styles of advertising, where they shop, how they selectproducts, etc. Therefore, it is absolutely imperative to understand the behaviour ofthe target audience.

Behavioural foundations of marketing communication

Marketing communicators direct their efforts towards influencing the consumer’sbrand related beliefs, attitudes and choices. Ultimately the objective is to encourageconsumers to purchase the marketer’s brand rather than those of the competitor’s.

To accomplish this goal, marketing communication designs appropriateadvertising messages, brand names, sales presentations and other communicationsactivities.There are two models that describe how consumers browse information and goabout choosing from the many alternatives available:

(i) The consumer processing model (CPM), where behaviour is seen asrational, highly cognitive, systematic and reasoned.

(ii) The hedonic experiential model (HEM), which views consumerbehaviour as driven by emotions in pursuit of fun and feelings.It must be recognized that consumer behaviour is much too complex and

diverse to be captured perfectly by two extreme models. These models are bipolarperspectives that anchor a continuum of possible consumer behaviours. At oneend of the continuum is consumer behaviour that is based on pure reason—cold,logical, rational (CPM); and at the other end is consumer behaviour that is basedon pure passion—hot, spontaneous and perhaps even irrational (HEM). Inbetween these extremes rests the bulk of consumer behaviour, most of which isnot based on pure reason or pure passion. Often both perspectives are applicableto understanding how and why consumers behave as they do.

8.4 INFORMATION PROCESSING: ATTENTION,COMPREHENSION AND RECALL

Information processing situation faced by consumers and the correspondingcommunication are imperatives for marketing communicators.

Consumers are constantly being bombarded with information which ispotentially relevant for making choices. Their reaction to that information, howthat information is interpreted, and how it is combined or integrated with otherinformation have crucial impacts on purchase choice. Hence, the marketingcommunicator’s decision on what information to provide to consumers, how much

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to provide and how to provide that information require knowledge of howconsumers process, interpret and integrate that information in marketing choices.Consumer information processing is in terms of eight iterated stages:

1. Exposure to information

The marketing communication task is to deliver messages to consumers who, it isexpected, will process the messages and be persuaded to undertake the course ofaction advocated by the marketer. When consumers come in contact with thecommunication message developed by the marketer, it is termed as exposure toinformation (see a magazine advertisement, hear a radio commercial) but the merefact of exposing consumers to the marketing communicator’s message does notensure that the message will have any impact. In order to ensure the success of thecommunication process, it is important that the exposure is gained sufficiently.

2. Selective attention

When one focuses on a message that he has been exposed and starts consideringit, then it is termed as attention. Consumers attend to only a small fraction of themarketing communication stimuli because demands placed on their attention aregreat. Attention is highly selective. Since the customers have limited informationprocessing capabilities, therefore selectivity is important. Customers will alwaystry to selectively pay attention to limited messages which are important to meettheir current objectives. This is because for processing each message, they will beutilizing some kind of mental energy. For instance, once their limited curiosity issatisfied, most non-smokers, when reading a magazine, will pay little attention toadvertisement for cigarettes because the product is less relevant to them than tosmokers.There are three kinds of attention:

(i) Involuntary,(ii) Non-voluntary and(iii) Voluntary.(i) Involuntary: Involuntary attention requires little or no effort on the part of

the receiver. A stimulus intrudes upon a resisting person’s consciousness.Attention is gained on the basis of the intensity of the stimulus (loud sound,bright light).

(ii) Non-voluntary: Non-voluntary attention or spontaneous attention occurswhen a person is attracted to a stimulus and continues to pay attentionbecause it holds her interests. A person in this situation neither resists norwilfully attends to the stimulus initially, but she continues to pay attentionbecause the stimulus has some benefit or relevance. Advertisers createmessages to gain non-voluntary attention of an audience since consumersdo not wilfully search out advertising messages. Advertisements must attractand maintain attention by being interesting and often entertaining.


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(iii) Voluntary: Voluntary attention occurs when a person wilfully notices astimulus. A consumer who is considering purchasing a car will direct herattention to car advertisements. Also people who have recently madeimportant purchase decisions will voluntarily attend to messages to reassurethemselves that their decisions were correct.

Attention is highly selective. Attention selectivity is determined both by propertiesof marketing stimulus and by factors that rest in the consumer’s background andpsychological makeup.Appeals to cognitive and hedonic needs: Consumers are congruent with theirinformational goals. A student who wants to move out of a dormitory and into anapartment will be on the lookout for information pertaining to apartments. Classifiedadvertisements and overhead conversations about apartments will be attended toeven when the apartment seeker is not actively looking for information.Advertisements for food products are likely to be noticed when people are hungry.

Many restaurants advertise on radio during the after-work rush hour. Theseare appeals to cognitive needs.

Hedonic needs are satisfied when consumers attend to messages that makethem feel good. People are likely to attend to those stimuli that have becomeassociated with rewards and that relate to those aspects of life that they valuehighly; for instance, sexually-oriented messages, the use of babies, appetizing fooditems, and gala events are commonly used stimuli in advertisements. These appealsare inherently pleasurable to most people because they are firmly associated inour memories with past good items, enjoyment and those things we value in life.Use of moving stimuli: Marketing communicators use unusual, distinctive orunpredictable devices. Such stimuli tend to produce greater attention than thosethat are familiar and routine. This is due to human adaptation. People adapt to theconditions around them. As stimuli become more familiar, people becomedesensitized to it. If you drive past a billboard each day, you notice it less on eachoccasion. If the billboard were removed, you would notice it was no longer there.We notice by exception.Use of intense stimuli: Intense stimuli, i.e., those that are louder, more colourful,bigger, brighter, etc., are more likely than less intense stimuli to attract attention.This is because it is difficult to avoid intense stimuli, thus leading to involuntary ornon-voluntary attention in shopping malls and departmental stores. Variouspackages, displays, signs, sounds and smells are used to attract customers’ attention.

Attention involves allocating limited processing capacity in a selective fashion.Effective marketing communication is designed to activate consumer interests byappealing to those needs that are most relevant to a market segment. This is noteasy as marketing communication environments (stores, advertising media andnoisy offices during sales presentation) are inherently cluttered with competitivestimuli and messages that vie for the customer’s attention. Clutter in TV advertisingreduces effectiveness of individual commercials. Commercials appearing in a stream

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of multiple commercials and those involving low involvement products succumb tothe clutter effect.

3. Comprehension

To comprehend is to understand and create meanings out of stimuli and symbols.Communication is effective when the meaning a marketing communication intendsto convey matches what is extracted by consumers from the message. Peoplerespond to their perceptions of the world and not to the world as it actually is.Perceptual encoding may be defined as interpretation of different stimuli through aperceptual process. There are two stages involved in this process:

The first stage is that of the feature analysis. The receiver tries to classify theproduct into a category by simply studying the product features (size, color,design, etc.). A consumer is able to distinguish a motorcycle from a bicycleby examining such features as size and presence of an engine. A lemon isdistinguished from an orange by its colour and shape.

The second stage is active synthesis. The situational factors play an extremelyimportant role in deciding the actual perception and interpretation of astimulus by the receiver. Interpretation results from combining stimulus featureswith expectations of what should be present in the context in which a stimulusis perceived. A synthetic fur coat placed in the window of a discount clothingstore (the context) is likely to be perceived as a cheap imitation. However,the same coat when attractively put in an expensive boutique (a differentcontext) might be considered a high quality, stylish garment.

Consumer’s perception/comprehension of marketing stimuli is determined bystimulus features and by the characteristics of the consumers themselves.Expectations, needs, personality traits, past experience and attitude towards thestimulus objects play an important role in determining consumer perceptions. Dueto the subjective nature of the factors that influence our perception, comprehensionis synergetic or peculiar to each individual (each individual’s personal characteristicsand background influences how he perceives someone else).

An individual’s mood also influences his/her perception of stimulus objects.Research has found that when people are in good mood they are likely to retrievepositive rather than negative material from their memories, are more likely to perceivethe positive side of things and are more likely to respond positively to a variety ofstimuli. Advertisements and personal selling are capable of placing consumers inpositive moods and may enhance consumer perception and attitudes towards themarketer’s offerings.

People occasionally misinterpret messages so as to make them consistentwith their existing beliefs, expectations or other cognitive elements. This is donewithout conscious awareness. But advertisements are not misinterpreted any morethan the other communication forms, such as programmes (serials) and publicservice announcements.


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4. Agreement with what is comprehended

Comprehension by itself does not ensure that the message will change consumers’attitude or influence their behaviour. The customer’s agreement with what he actuallycomprehends depends upon the fact that whether he finds the message to becredible or not. Additionally, whether the message is in alignment with his currentvalues and beliefs or not is of great importance. For instance, a consumer who ismore interested in the social-value implications of consuming a product rather thanin acquiring a functional value is more likely to be persuaded by a message thatassociates the brand with a desirable group than one that talks about productfeatures.

5. Retention and search/retrieval (recall) of stored information

Retention and information search and retrieval involve memory factors related toconsumer choice. Memory factors may be linked to what the customer actuallyrecalls out of the marketing stimuli, that is what recall and recognition has resultedbecause of the communication message. It additionally depends upon how thecustomer accesses and retrieves information while making his purchase decisionor while making his choices of buying a product. Memory is inseparable from theprocess of learning.Elements of memory: There are two parts of memory, long-term memory (LTM)and short-term memory (STM) and a set of sensory stores (SS). Information isreceived by one or more sensory receptors (signs, smell, touch and so on) andpassed on to an appropriate SS where it is rapidly lost (within a fraction of asecond) unless attention is allocated to the stimulus. Attended information is thentransferred to STM, which serves as the centre for current processing activity byintegrating information from sense organs and from LTM. STM has limitedprocessing capacity, i.e., individuals can browse only a limited amount of informationat any one time. An excessive amount of information will result in reduced recognitionand recall. Furthermore, information in STM that is not thought about or rehearsedwill be lost from STM in thirty seconds. Information is then transferred from STMto LTM, which is a virtual storehouse of unlimited information. Information inLTM is organized into coherent and associated cognitive units. There are associativelinks between/among related information knowledge and beliefs.

A marketer’s job is to provide positively valued information that consumerswill store in LTM, which will increase the chance of choosing the marketer’s offeringsover competitive options. The marketing communicator’s task is to facilitateconsumer learning. Learning represents changes in the content or organization ofinformation in consumer’s LTM. Marketing communication attempts to alterconsumers’ long-term memories by facilitating learning of information that iscompatible with the marketer’s interests (HP tries to facilitate business consumer’slearning that HP Scanjet scanners are simple to set up and use).Types of learning: One type of learning is the strengthening of linkages amongspecific memory concepts. Ford promotes the theme ‘quality is job’. The purpose

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is to affix in the consumer’s memories a strong linkage between Ford cars andquality. Linkages are strengthened by repeating claims, presenting them in a moreconcrete fashion and being creative in conveying product failures.

A second form of learning is by establishing entirely new linkages. Researchersreported that aspirin reduces likelihood of heart attacks. Advertisers began activelypromoting their brands as ‘heart attack’ fighters. Aspirin advertisers wantedconsumers to establish an entirely new linkage, that this product has benefits otherthan relieving headaches.

6. Search and retrieval of information

Information that is learned and stored in memory only impacts consumer choicebehaviour when it is searched and retrieved. Retrieval is when a new piece ofinformation is linked or associated with another concept that is itself well knownand easily accessed.Use of concretizing and imagery: Concretization is based on the idea that it iseasier for people to search and retrieve tangible rather than abstract information.Product claims become more concrete when they are made tangible and vivid.For instance, the makers of Anacin tablets needed a concrete way to present thebrand as ‘strong pain relief for splitting headaches’. The idea of splitting headachewas concretized by showing hard-boiled eggs splitting with accompanying soundeffects.

Imagery is the representation of sensory experience in short-term memory,including visual, auditory and other sensory experiences. You do not have an imagefor satisfaction. Mental imagery plays an important role in comprehension, recall,retrieval, attitude formation and choice. Pictures and visuals are best able to elicitimagery because pictures are represented in memory in verbal as well as visualform whereas words are less likely to have visual representations. Visual imageryplays an important role in advertising and point of purchase stimuli. Informationabout product attributes is better recalled when the information is accompaniedwith pictures than when presented only as prose. People remember greater numberof company names when the names are paired with meaningful pictures. Effectivevisual imagery in advertising can play the audience member in a number of imaginedor fantasy like situations that are conducive to the sale of the marketer’s product.The advertisement may play the consumer behind the wheel of a powerful sportscar cruising down a country lane.

Much of what we feel and visualize internally is based on what we see and70 to 80 per cent of what we learn is visual. Imagery is also elicited by appeals toother senses—auditory and olfactory (smell and tactile). A TV commercial wouldnot be good if it contained just conversations without background music. Marketingcommunications appeal to our senses and evoke images that activate our emotions,influence our cognition and enhance the marketing messages.

The special case of olfactory stimuli is when store environments are filledwith pleasant and purchase-enhancing odours. Packages and magazine


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advertisements are encapsulated with scents that are emitted when scratch andsniff patches are rubbed. Smells can evoke strong images of products, productusage and consumption situations. Olfactory stimuli are able to attract attention,motivate information processing, influence memories, affect product-performanceevaluations and activate behaviour.

7. Deciding among alternatives

Till now consumers have received, encoded and stored information that is pertinentto making consumption choices. Stored in consumers’ memories are numerousinformation packets for different consumption alternatives. This belief is in theform of bits and pieces of knowledge (Nike is a brand of tennis shoes), specificbeliefs (Chevrolet Optra is an attractive car) and evaluations of purchaseconsequences (The manufacturer’s reputation is more important than price whenbuying sophisticated electronic equipment).

The issue is, when contemplating a purchase from a particular productcategory, how does a consumer decide which brand to purchase? He will buy thebest brand, but it is not always clear what the best brand is as the consumer hasstored in long-term memory a wide variety of information (facts, beliefs, etc.)about each brand. Some of the information is negative and some of it is positive,some may be contradictory or incomplete.

Consumers often resort to simplifying strategies or heuristics to arrive atdecisions that are at least satisfactory if not perfect.

Simplest decision heuristics is affect driven, as the individual simply callsfrom memory his attitude or affect towards relevant alternatives and picks thatalternative for which the affect is most positive. This process works for frequentlypurchased items where the risk is minimum (low involvement purchase).Compensatory heuristics: Rarely is a particular alternative completely superioror dominant over other consumption alternatives. Although a brand may bepreferable with respect to one, two or several benefits, it is unlikely that it is superiorto its alternatives in terms of all benefits or attributes that consumers are seeking.Under these non-dominant circumstances, consumers must give up something inorder to get something else. In high involvement decision making, trade-offs mustbe made. If you want more of a particular benefit, you have to pay a higher price;if you want to pay less, you give something less in terms of performance.

The chosen alternative is not the best in terms of all criteria. Superiority ofsome criteria affects or compensates for its lesser performance on some othercriteria. The consumer cannot have it all unless he is willing to pay a super premiumprice.

In conjunctive heuristics the consumer establishes cut-offs or minimalperformance on all pertinent choice criteria. An alternative is retained for furtherconsiderations only if it meets or exceeds all minima.

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In high involvement decisions a combination of heuristics are used insequence. A conjunctive strategy may be used to eliminate options and thencompensatory heuristics is applied to arrive at a choice from the remaining optionsthat do satisfy all the minima.

8. Purchase

Acting on the basis of the decision, consumer choice behaviour does not operatein a simple, lockstep fashion. People do not always behave in a manner consistentwith their preference. A major reason is the presence of events or situational factorsthat disrupts, inhibit or prevent consumers from following through on their intentions.Situational factors are especially prevalent in the case of low involvement consumerbehaviour. Stock outs, price offs, in-store promotions lead to purchase of brandsthat are not necessarily the most preferred and which would not be the predictedchoice based on some heuristics. All aspects of marketing must be coordinatedand integrated in order to get consumers to act favourably towards the marketer’soffering.

8.5 TWO-STEP FLOW OF COMMUNICATION:OPINION LEADERS

According to a study conducted by Paul Lazarsfeld, Bernard Berelson and HazelGaudet in 1948, it was suggested that the influence of mass media was less directin nature than it was previously suggested. According to their study, it was suggestedthat though mass media has a greater opportunity to reach a larger audience,actually it is not too direct in nature as it is perceived to be. It is actually firstfiltered by the key influencers or the key opinion leaders at the market place andthe filtered perceptions actually trickle down to different target groups. Thus, throughtheir study it could be established that people are more strongly influenced by theirpersonal encounters with their own set of key opinion leaders in comparison tothe mass media directly.

An opinion leader is a person who influences others’ attitudes or behavioursbecause they are perceived as possessing expertise about the product.

In an era when mass media has become the major source of advertiser-controlled communication, key opinion leaders play an extremely important rolewhen one wants to take new product adoption and diffusion decisions. Word-of-mouth communication is generally more robust and credible to consumers thanadvertising messages. Furthermore, it is assumed that personal interaction has thepotential of providing a greater magnitude of reward for a complying consumerthan mass media. Hence, consumers still turn to friends and influential others foradvice on uncertain situations during their decision-making process, making theseothers’ influence an important determinant of an individual’s behaviour, as well asof opinion formation. This is especially true when a marketer is interested in


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persuading a small audience to form a favourable attitude towards an advocatedposition, rather than simply informing a large audience about that position.

Key opinion leaders not just play a role in personally influencing differentset of people; opinion leadership has also been suggested to be linked to theprofile of an innovator. Although opinion leaders and new-product adopters arenot synonymous, they reveal similar traits. Since innovation may be a trait of thekey opinion leaders, therefore early adopters can influence the behaviour of thelate adopters in terms of trying a new product or a new service.

The essence of this interpersonal channel of influence is human interaction,and the opinion leader is a key factor. A major issue is how best to recognize suchwilling opiniongivers. Notwithstanding the extensive research devoted to the studyof opinion leadership, it is still difficult to develop a profile of an opinion leader.One cannot generalize the different traits of key opinion leaders. It primarily dependsupon the type of market, the current situation and the product. It is imperative thatcurrent research continues to further the understanding and validation of opinion-leader characteristics. After all, these influential persons who can be an asset in thepromotion of new products and ideas can also lead an active opposition.

Characteristics of an opinion leader

Here, we will study about an opinion leader’s demographics, product-related andpersonality characteristics.

Demographics

Opinion leaders are generally expected to have similar demographic pattern asthat of their followers. This is generally true in terms of the values, beliefs, educationalstatus, etc. This is because the followers are better able to relate with their keyopinion leaders due to these similarities that they have. Thus the two parties arehomophilics in nature. However, at times the educational qualifications of the keyopinion leaders may be superior but it has been rarely seen that they come from adifferent social class. The demographic characteristics are similar because of thevarious similarities that they have. Generally both groups of people have commonvalues, beliefs and backgrounds. Thus the communication between such groups isa smoother process and is often horizontal in nature.

It may be very difficult to categorize opinion leaders across different classesand categories. Very rarely a correlation can be developed between the demographiccharacteristics of different key opinion leaders. These demographic variables mayinclude income, age, qualifications, details of children, etc. Though several studieshave been done to aim at defining opinion leaders in socio-demographic terms butnot much success has been achieved as it may not be really possible appropriatelyidentify the opinion leaders with demographic variables alone.

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Product-related characteristics

Opinion leaders have been found to be more knowledgeable about and enduringlyinvolved with the relevant product class. Individuals who are highly involved witha product or product class are more likely to be interested in and accumulateknowledge about that product. Enduring product involvement would also berelatively stable, and would influence the amount of information that the individualaccumulates from various sources over time. Therefore, those who are highlyinvolved in a particular product class can be expected to be better able to impartopinions about it.

Product familiarity also plays an important role in establishing opinionleadership. The label ‘opinion leader’ implies qualities that go beyond simple informaladvice-seeking from peers; it strongly suggests influence. Maintaining this leadershiprole requires being part of an active public and being generally more attentive toissues of the day. Most important of all, it requires a willingness to expend a greatamount of cognitive effort to acquire and comprehend the extensive knowledge ofthat product or product class. Familiarity founded on an acute interest in orownership of items in the product class should make assimilation of relatedinformation easier, thus greatly reducing the cognitive effort required.Research and findings have revealed that interest, media exposure and competenceare the parameters that can be directly and more positively associated with opinionleadership. Some of the product related traits may be expressed by opinion leaders.These include:

Possessing greater knowledge about the product category Exhibit greater involvement in the product category Keen to go through available literature, books, magazines, etc. which have

relevance with respect to the product. More receptive and active in gaining information about the product from

different sourcesOpinion leaders may have greater information with respect to the subject on whichthe information is regularly sought from them. This is because they are more exposedthan their counterparts or followers with respect to different sources of information.They have a greater exposure to media, communication sources, etc. Additionally,they read and view more about the information related to the subject.

Other factors that need to be considered are the extent of media exposurein terms of quality and not quantity. Opinion leaders would have more quality timeand hence quality interactions with the media persons when compared to theirfollowers. Though even the non-leaders may be exposed to similar media sourceswith respect to a product but opinion leaders are capable and qualified enough toassimilate this information with the one that is available with them from the othersources as well and thus form an opinion. They can indulge into carefulinterpretations of the information that is available from various public events.


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Additionally, the opinion leaders are more confident about discussing theirexperience with the product as they are amongst the first ones to use the productthemselves and thus they ensure that others have lowest risk and uncertaintyinvolved. Not only this, they are also the first ones to try the new products in agiven segment and therefore, another name that has been given to the opinionleaders is that of innovative communicators.

Personality characteristics of the opinion leaders

There are primarily two personality traits that have been observed with opinionleaders across different product categories. These are the following:

They are extremely self-confident: This is because of the extensiveknowledge that they have gained about a given product. This results fromthe interest that they have in a product, the exposure to different media andsources of information.

They are extremely socially active: They have extreme amount ofwillingness to communicate about a given product and services offered bythe same. They are extremely interconnected with different groups andgenerally set up their offices of operation in a community, club, etc. Thusopinion leaders are capable of coming in contact with several people intheir profession.

Opinion leaders indulge and participate in various open meetings, social settings,different social networks and social events, etc. Opinion leaders generally sharethe same set of values, beliefs, interests, considerations, etc. with their followers.The personal influence of an opinion leader varies with the degree of similarity ofinterests that the opinion leader has with his followers. The lesser the similarity,greater are the barriers of the communication flow.

For opinion leadership, public individualization is also extremely importantin addition to the personal involvement and the familiarity and knowledge about aproduct.The social attributes possessed by different opinion leaders include:

Extrovert and outgoing nature Indulgence in social activity Focus on social networks Openness to society Recognition in society Trustworthiness and integrity

To sum up, consistent with major findings of past research, it may be expectedthat opinion leaders will exhibit greater personal involvement and greater familiaritywith the product class, more favourable attitude toward risk (i.e., risk preference),greater print media exposure, and will be less dogmatic. This study also posits thatopinion leaders will exhibit a greater degree of public individuation.

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Methods involved in identification of opinion leaders

(i) Method of self-designation

This method was developed by King and Summers in the year 1970. Opinionleadership can be measured by this method. This method originally could actuallymeasure the direction of influence with respect to a specific product betweendifferent friends.

A revised scale was then developed and implemented wherein individualswere asked that whether they themselves considered or believed that they couldbe opinion leaders for a given product. Though the information which can befound out with the help of this method could be useful but then it should be criticallyevaluated as it is expressed by the individuals themselves. This is also importantbecause individuals at times either may overestimate or underestimate themselvesand therefore the results or information provided is actually the reflection of the same.

The method may not be therefore considered as truly reliable and trustworthyand a more systematic and logical analysis may be required. This is required as itis important to verify the expression of the individuals. However, this method alsohas the advantage of being applicable to a large group of people.

(ii) Key informant approach

This method involves selecting a set of people in a group of people who may beconsidered to be informed about the influence patterns in a given group. Oncethese people are selected, these people can be asked questions with respect toidentification of the possible opinion leaders in a group. This method has theadvantages of being cost effective and of being a time saving method. However,the prime limitation of this method is that the methodology involved in this approachis that limited sample size is used and therefore only a sample of audience may beasked questions.

(iii) Sociometric methods

These types of methods generally work by identifying the patterns of communicationamong the different members of the group. This then helps in understanding andstudying the member interactions by systematically tracking it. Interview processhelps in gathering the data from the group and learning from them that which groupof people they approach when they wish to gather information with respect to aproduct. The advantage of this method is that it is much more precise. However,it could prove to be more expensive and one may also encounter problems relatedto administering it. The best social set ups which particularly support theimplementation of the sociometric methods are army bases, hospitals, prisons,etc., that are closed social settings.


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1. A marketer’s primary communications tools are media advertising, directmail advertising, telephone selling, trade shows, and personal selling.

2. These are specially designed showrooms that allow customers to observeand try out complex products. A variant of the approach is a travellingdemonstration centre in which the equipment for sale is mounted on a trailertruck.

3. In context of marketing, communication refers to the correctness inperception developed by the customer based on the communication messageof the marketer while he is advertising for his products.

4. The social attributes possessed by different opinion leaders include: Extrovert and outgoing nature Indulgence in social activity Focus on social networks Openness to society Recognition in society Trustworthiness and integrity

8.7 SUMMARY

Communication is a process that involves a series of actions and a numberof factors to transmit a message from one end to another.

A rich medium can:o convey a message using more than one kind of clue (visual, verbal or

vocal),o facilitate feedback, ando establish personal focus.

The face-to-face conversation is the richest medium. Psychological noise is the one that interferes with communication taking

place between two people because one of them is not attentive to thecommunication, and is mentally absent. Any physiological problem such asa headache or body pain can make it difficult for a listener to concentrateon the communication. This is termed as physiological noise.

For marketing communication to succeed, two processes must take placein the customers’ minds. First, what the customers saw, heard, learned,thought, or felt while exposed to the advertisement must be processed and

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stored in memory, and second, this stored information in customer mindsmust be retrieved at the crucial moment when a customer faces a purchasedecision.

The conventional wisdom of inundating customers with multiple messagesfrom multiple vehicles in the hope that at least some will stick, does notwork. Nothing sticks.

Each marketing discipline has a goal in relation to other disciplines and alsoin relation to the overall objective of the campaign. The objective of thecampaign is more likely to be achieved if various groups work in coordination,rather than independently, under the guidance of the marketing team.

Companies can also indulge into dialogues or two-way communication withthe customers. This is extremely interactive mode of communication. Thistype of communication generally takes place over an extended period oftime. This involves a number of multiple channels.

Dialogues are an important means of communication through which thecompanies can win back their lost customer, can also anticipate defectionsand induce the customers to ensure greater purchases.

A marketer’s primary communications tools are media advertising, directmail advertising, telephone selling, trade shows, and personal selling. Thecost per message is lowest for advertising and highest for personal selling.Telephone and personal selling offer flexibility in tailoring the message to thetarget prospect but at a substantial cost.

There are primarily three principles of communication: simplicity, clarity andbrevity.

The chief ingredient for enhancing the effectiveness of communication isEmpathy. Empathy is at the core of the communication. Empathy meansputting oneself in the shoes of the other person and to have feeling of theother person. Any communication with empathy will always bring peoplecloser and will go a long way in developing a harmonious relationship.

The effectiveness of any marketing communication depends upon theinterpersonal relationship. In other words, effectiveness of relationshipdepends upon the relationship between the communicator and the receiver.Thus, effectiveness of any marketing communication is directly proportionalto this interpersonal relationship that a marketer is able to develop with hiscustomers.

Communication is nothing but the flow of the information from sender to thereceiver so that a commonality of thought can be achieved between the twoparties. In context of marketing, this refers to the correctness in perceptiondeveloped by the customer based on the communication message of themarketer while he is advertising for his products.


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All communication activities involve eight elements:1. A source2. Encoding3. A message4. A channel (medium)5. A receiver6. Decoding7. Possibility of noise8. Feedback potential

When one focuses on a message that he has been exposed and startsconsidering it, then it is termed as attention. Consumers attend to only asmall fraction of the marketing communication stimuli because demandsplaced on their attention are great. Attention is highly selective. Since thecustomers have limited information processing capabilities, thereforeselectivity is important.

Communication is effective when the meaning a marketing communicationintends to convey matches what is extracted by consumers from the message.

Consumer’s perception/comprehension of marketing stimuli is determinedby stimulus features and by the characteristics of the consumers themselves.Expectations, needs, personality traits, past experience and attitude towardsthe stimulus objects play an important role in determining consumerperceptions.

Visual imagery plays an important role in advertising and point of purchasestimuli. Information about product attributes is better recalled when theinformation is accompanied with pictures than when presented only as prose.People remember greater number of company names when the names arepaired with meaningful pictures.

It is imperative to emphasize that rational consumer processing (CPM) andhedonic experiential (HEM) models are not mutually exclusive. Individualsapprehend reality by these rational and experiential processes operatinginteractively with one another, with their relative influence contingent on thenature of the situation and amount of emotional involvement.

HEM probably better explains how consumers process information andmake decisions when they are carefree, happy and confronted with positiveoutcomes. Whereas the CPM perspective views consumers as pursuingsuch objectives as ‘obtaining the best buy’, ‘getting the most for money’,and ‘maximizing utility’, the HEM perspective recognizes that people oftenconsume products for the sheer fun of it or in the pursuit of amusement andfantasies of sensory stimulation.

An opinion leader is a person who influences others’ attitudes or behavioursbecause they are perceived as possessing expertise about the product.

NOTES



Key opinion leaders not just play a role in personally influencing differentset of people; opinion leadership has also been suggested to be linked tothe profile of an innovator.

Opinion leaders are generally expected to have similar demographic patternas that of their followers. This is generally true in terms of the values, beliefs,educational status, etc. This is because the followers are better able torelate with their key opinion leaders due to these similarities that they have.

The label ‘opinion leader’ implies qualities that go beyond simple informaladvice-seeking from peers; it strongly suggests influence. Maintaining thisleadership role requires being part of an active public and being generallymore attentive to issues of the day. Most important of all, it requires awillingness to expend a great amount of cognitive effort to acquire andcomprehend the extensive knowledge of that product or product class.

There are primarily two personality traits that have been observed withopinion leaders across different product categories. First, they are extremelyself-confident and second, they are extremely socially active.

For opinion leadership, public individualization is also extremely importantin addition to the personal involvement and the familiarity and knowledgeabout a product.

8.8 KEY WORDS

Marketing Communication: It refers to the means adopted by thecompanies to convey messages about the products and the brands theysell, either directly or indirectly to the customers with the intention to persuadethem to purchase.

Attention: It is the notice taken of someone or something. Consumer processing model (CPM): It is a model which shows marketers

how buyers make decisions in a rational, systematic, and reasoned way. Hedonic experiential model (HEM): It is model of looking at consumer

purchasing decisions from an emotional standpoint, appealing to consumers’feelings.

Opinion leader: It is a person with expertise or influence in a specific area.He/she can be used by businesses to build trust with their customers orgrow their sales.



1. Which two processes must take place in the customers’ minds for marketingcommunication to succeed?


NOTES


2. Explain two types of communications that companies indulge in tocommunicate with the customers.

3. State the three principles of communication.4. Which are the two models that describe how consumers browse information

and choose a suitable product?5. What are involuntary, non-voluntary and voluntary attention?6. What are consumer processing (CPM) and hedonic experiential (HEM)

models?7. What was the influence of mass media according to a study conducted by

Paul Lazarsfeld, Bernard Berelson and Hazel Gaudet in 1948?8. Which product related traits are expressed by opinion leaders?9. What are psychological noise, physiological noise and semantic noise?


1. Summarise the methods used by the marketers to grab the attention of thecustomers in their target market.

2. Describe the eight elements of a communication activity.3. Explain the eight iterated stages of consumer information processing.4. What role do opinion leaders play in influencing people’s behaviour and

attitudes? Explain.5. Describe the personality characteristics of an opinion leader.6. Illustrate the methods involved in identification of opinion leaders.







NOTES


Consumers in their Socialand Cultural SettingsBLOCK - III

SOCIAL CLASS OF CONSUMERS

UNIT 9 CONSUMERS IN THEIRSOCIAL AND CULTURALSETTINGS

Structure9.0 Introduction9.1 Objectives9.2 Reference Group: Nature, Types and Influences on Consumers9.3 Family Life Cycle Stages9.4 Answers to Check Your Progress Questions9.5 Summary9.6 Key Words9.7 Self Assessment Questions and Exercises9.8 Further Readings

9.0 INTRODUCTION

The term group may be defined as two or more people who interact with each inorder to achieve mutually agreed upon goals. Consumer group refers to individualsor group of individuals or the family who have a need and desire of purchasing agood or service in order to fulfil their needs. It is a natural tendency on the part ofan individual to look up to another as with comparison. Each one of us lookstowards another individual or a group as a standard of comparison. This group towhich a person looks up as a point of comparison is known as a reference group.A reference group may be a person or a group to which an individual looks up asa frame of reference for his general and specific acts of behaviour, values, opinionsand attitudes. The reference group exercises tremendous influence on an individual.This is true for consumer behaviour as well.

For a marketer, the family as a social unit possesses a tremendous importance.Researchers have studied the consumption behaviour across the various stages ofthe family life cycle. They have attempted to study the various peculiarities, tried torelate these to the stages in the FLC, and drawn generalizations. The family lifecycle has been defined as a series of stages through which most families’ progress,with varying characteristics across various stages; these characteristics relate tomarital status, size of the family, the age profile of the family members, theemployment status of the head of household, the income level and the disposableincome at hand. Let us discuss in detail about the reference groups and the familylife cycle in the following unit.

Consumers in their Socialand Cultural Settings

NOTES


9.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning and nature of reference group Explain the types of reference group Discuss its influences on consumers State the stages of a family life cycle

9.2 REFERENCE GROUP: NATURE, TYPES ANDINFLUENCES ON CONSUMERS

Almost all individuals regularly interact with other people who directly or indirectlyinfluence their purchase decisions. Thus, the study of groups and their impact onthe individuals is of great importance to marketers concerned with influencingconsumer behaviour.

Consumer reference groups are groups that serve as frames of referencefor individuals in their purchase decisions. Examples of reference groups include(1) friendship groups, (2) shopping groups, (3) work groups, (4) virtual groups orcommunities, and (5) consumer-action groups. Reference groups that influencegeneral values or behaviour are called normative reference groups; those thatinfluence specific attitudes are called comparative reference groups. The conceptof consumer reference groups has been broadened to include groups with whichconsumers have no direct face-to-face contact, such as celebrities, political figures,and social classes.

The credibility, attractiveness, and power of the reference group affect thedegree of influence it has. Reference group appeals are used very effectively bysome advertisers in promoting their goods and services because they subtly inducethe prospective consumer to identify with the pictured user of the product.

The five types of reference group appeals most commonly used in marketingare celebrities, experts, the common man, the executive and employeespokesperson, and the trade spokesperson. Celebrities are used to givingtestimonials or endorsements as actors or as company spokespersons. Expertsmay be recognised experts in the product category or actors playing the part ofexperts (such as an automobile mechanic). The common-man approach is designedto show that individuals who are just like the prospect are satisfied with theadvertised product. Increasingly, firms are using their top executives asspokespersons because their appearance in company advertisements seems toimply that someone at the top is watching over the consumer’s interest.

For many consumers their family is the primary reference group for manyattitudes and behaviours. The family is the prime target market for most products

NOTES



and product categories. As the most basic membership group, families are definedas two or more persons related by blood, marriage, or adoption that reside together.There are three types of families: married couples, nuclear families, and extendedfamilies. Socialization is a core function of the family. Other functions of the familyare the provision of economic and emotional support and the pursuit of a suitablelifestyle for its members.

The members of a family assume specific roles in their everyday functioning—such roles or tasks extend to the realm of consumer purchase decisions. Keyconsumer-related roles of family members include influencers, gatekeepers,deciders, buyers, preparers, users, maintainers, and disposers. A family’s decision-making style often is influenced by its lifestyle, roles, and cultural factors.

The majority of consumer studies classify family consumption decisions ashusband-dominated, wife-dominated, joint, or autonomic decisions. The extentand nature of husband-wife influence in family decisions depends, in part, on thespecific product or service and selected cultural influences.

What is a Group?

Most individuals interact with other people on a daily basis, especially with membersof their own families. The family commonly provides the opportunity for productexposure and trial and imparts consumption values to its members.

A group is two or more people who interact to accomplish either individualor mutual goals. This broad definition covers everything from intimate groups toformal work groups. Included in this definition, is a kind of ‘one-sided grouping’ inwhich an individual consumer observes the appearance or actions of others whounknowingly serve as consumption-related role models. Sometimes groups areclassified by membership status. A group to which a person either belongs orwould qualify for membership is called a membership group. There are also groupsin which an individual is not likely to receive membership, despite acting like amember by adopting the group’s values, attitudes, and behaviour—these areconsidered to be symbolic groups.

Understanding the Power of Reference Groups

A reference group is any person or group that serves as a point of comparison (orreference) for an individual in forming either general or specific values, attitudes,or a specific guide for behaviour. They help us understand the impact of otherpeople on an individual’s consumption beliefs, attitudes, and behaviour. It helpsmarketers choose their methodology to affect desired changes in consumerbehaviour.

From a marketing perspective, reference groups are groups that serve asframes of reference for individuals in their purchase or consumption decisions.Reference groups that influence general or broadly defined values or behavioursare called normative reference groups.


NOTES


Reference groups that serve as benchmarks for specific or narrowly-definedattitudes or behaviour are called comparative reference groups. A comparativereference group might be a neighbouring family whose lifestyle appears to beadmirable and worthy of imitation. Normative reference groups influence thedevelopment of a basic code of behaviour. Comparative reference groups influencethe expression of specific consumer attitudes and behaviour.

A Broadened Perspective on Reference Groups

The meaning of ‘reference group’ has changed over the years. Originally, referencegroups were narrowly defined to include only those groups with which a personinteracted on a direct basis. The concept has gradually broadened to include directand indirect individual or group influences.

Indirect reference groups consist of those individuals or groups with whoma person does not have direct face-to-face contact, such as movie stars, sportsheroes, political leaders, TV personalities, or even a well-dressed and interestinglooking person on a street corner. References a person might use in evaluating hisor her own general or specific attitudes or behaviour vary.

Factors that Affect Reference Group Influence

The degree of influence that a reference group exerts on an individual’s behaviourusually depends on the nature of the individual and the product and on specificsocial factors.

An individual who has first-hand experience with a product or service, orcan easily obtain full information about it, is less likely to be influenced bythe advice or example of others. A person who has little or no experiencewith a product or service and does not expect to have access to objectiveinformation about it (e.g., a person who believes that relevant advertisingmay be misleading or deceptive) is more likely to seek out the advice orexample of others.

A reference group that is perceived as credible, attractive, or powerful caninduce consumer attitude and behaviour change.

When primarily concerned with the acceptance or approval of others theylike, with whom they identify, or who offer them status or other benefits,consumers are likely to adopt their product, brand, or other behaviouralcharacteristics. When consumers are primarily concerned with the powerthat a person or group can exert over them, they might choose products orservices that conform to the norms of that person or group in order to avoidridicule or punishment. Unlike other reference groups, however, powergroups are not as likely to cause attitude change. Individuals may conformto the behaviour of a powerful person or group but are not as likely toexperience a change in their own attitudes.

NOTES



Different reference groups may influence the beliefs, attitudes, andbehaviours of an individual at different points in time or under differentcircumstances.

A visually conspicuous product is one that will stand out and be noticed. Averbally conspicuous product may be highly interesting, or it may be easilydescribed to others. Products that are especially conspicuous and statusrevealing (a new automobile, fashion clothing, sleek laptop computer, orhome furniture) are most likely to be purchased with an eye to the reactionsof relevant others.

Marketers may have divergent goals with regard to consumer conformity. Theability of reference groups to change consumer attitudes and behaviour byencouraging conformity is subject to the group’s ability to:

Inform or make the individual aware of a specific product or brand. Provide the individual with the opportunity to compare his or her own thinking

with the attitudes and behaviour of the group. Influence the individual to adopt attitudes and behaviour that are consistent

with the norms of the group. Legitimize the decision to use the same products as the group. A nonconformity appeal is also possible but requires a shift in attitudes or

behaviour.

Selected Consumer-Related Reference Groups

Five specific reference groups are considered because they give us a kind ofcross-section of the types of groups that influence consumers’ attitudes andbehaviour. They are:

Friendship groups Shopping groups Work groups Virtual groups or communities Consumer-action groups

Let’s discuss them briefly here.

Friendship Groups

Friendship groups are classified as informal groups because they are usuallyunstructured and lack specific authority levels. Seeking and maintaining friendshipis a basic drive of most people. The opinions and preferences of friends are animportant influence in determining the products or brands a consumer ultimatelyselects.


NOTES


Shopping Groups

Two or more people who shop together can be called a shopping group. Themotivations range from primarily social to reducing risk. A special form of ashopping group is the in-home shopping party. Early purchasers tend to create abandwagon effect. Undecided guests often overcome a reluctance to buy whenthey see their friends make positive purchase decisions. Furthermore, some of theguests may feel obliged to buy because they are in the home of the sponsoringhost or hostess.

Work Groups

Both the formal work group and the informal friendship/work group have potentialfor influencing consumer behaviour. The formal work group consists of individualswho work together as part of a team and, thus, have the opportunity to influenceeach other’s consumption-related attitudes and actions. Members of informalwork groups may influence the consumption behaviour of other members duringcoffee or lunch breaks or after-hours meetings. Recognising that work groupsinfluence consumers’ brand choices and that most women now work outsidethe home, firms are redirecting their sales efforts to the workplace rather thanthe home.

Virtual Groups or Communities

Thanks to computers and the Internet, virtual groups or communities have beenformed. While fifty years ago the definition of a community stressed the notion ofgeographic proximity and face-to-face relationships, today’s communities are muchmore broadly defined as sets of ‘social relations among people.’ These communitiesprovide their members with access to an extensive amount of information and/orfellowship and social interaction covering a wide range of topics and issues. Theanonymity of the Internet gives its users the freedom to express whatever viewsthey wish, and to also benefit from savouring the views of others. Because of thisanonymity, Internet users can say things to others that they would not say in face-to-face interactions. Communicating over the Internet permits people to explorethe boundaries of their personalities. The next step in the evolution of communitieswill be brand communities.

Consumer-Action Groups

A consumer-action group has emerged in response to the consumerist movement.It can be divided into two broad categories. Those that organize to correct aspecific consumer abuse and then disband. And, those that organize to addressbroader, more pervasive problem areas and operate over an extended or indefiniteperiod of time. The overriding objective of many consumer-action groups is tobring sufficient pressure to bear on selected members of the business communityto make them correct perceived consumer abuses.

NOTES



Major Types of Reference Group Appeals

Five major types of reference group appeals in common marketing usage are: Celebrity appeals Expert appeals Common man appeals Executive and employee appeals Trade or spokes-character appeals

These appeals, as well as less frequently employed appeals, are oftenoperationalised in the form of testimonials or endorsements. In the case of thecommon man, they may be presented as slice-of-life commercials.

(i) Celebrities

Celebrities have a very common type of reference group appeal. They representan idealization of life that most people would love to live. Advertisers spendenormous sums of money to have celebrities promote their products with theexpectation that the reading or viewing audience will react positively to the celebrity’sassociation with their products.

A firm has the choice of using the celebrity in different ways:

Testimonials, if the celebrity has personally used the product. Endorsement, when the celebrity adds his/her name to products which he/

she may be an expert with or not. Actor or spokesperson, when the celebrity represents the product over

time in a variety of media and in personal appearances.Celebrity credibility is a powerful influence. It is based on the audience’s perceptionof the celebrity’s expertise and trustworthiness. Not all companies use celebritiesbecause they aren’t convinced they are worth the money.

(ii) The Expert

A type of reference group appeal used by marketers is the expert—a person who,because of his or her occupation, training, or experience can help the consumerevaluate the product being promoted.

(iii) The Common Man

A reference group appeal of based on testimonials of satisfied customers is calledthe common-man approach. It demonstrates that someone just like the customeris satisfied with the product or service. These commercials are described as beingslice-of-life commercials. Families are often depicted in ‘real-life’ situations incommercials.


NOTES


(iv) The Executive and Employee Spokesperson

This form of advertising has grown more popular over the last few years and is theresult of the success of highly innovative executive spokespersons. Like thecelebrity, the executive spokesperson is admired by the general population becauseof his/her achievements and the status implicitly conferred on business leaders. Avariation of this is the use of a lower level manager or front-line employee whospeaks directly to the consuming public.

(v) Trade or Spokes-Characters

The trade or spokes-character and the cartoon character serve as quasi-celebrityendorsers. This person represents the idealized image and dispenses importantproduct information. This category of ‘person’ is largely exclusive to a specificproduct or product-line.

Other Reference Group Appeals

There are other forms of reference group appeals, such as the respected retaileror the editorial content of special-interest magazines. Seals of approval andobjective product ratings can also serve as potential endorsements.

Check Your Progress

1. What are consumer reference groups?2. Define comparative reference group.3. Name major types of reference group appeals in common marketing usage.4. What is common-man approach?

9.3 FAMILY LIFE CYCLE STAGES

Sociologists and consumer researchers have long been attracted to the concept ofthe family life cycle (FLC) as a means of depicting what was once a rather steadyand predictable series of stages that most families progressed through.

The current decline in the percentage of families that progress through atraditional FLC (to be explored shortly) seems to be caused by a host of societalfactors including increasing divorce rate, number of out-of-wedlock births, andbreaking up of joint families.

FLC analysis enables marketers to segment families in terms of a series ofstages spanning the life course of a family unit. The FLC is a composite variablecreated by systematically combining such commonly used demographic variablesas marital status, size of family, age of family members (focusing on the age of theoldest or youngest child), and employment status of the head of household.

NOTES



The ages of the parents and the relative amount of disposable income usuallyare inferred from the stage in the family life cycle.

Traditional Family Life Cycle

Traditional family life cycle models have five basic stages:

Stage I—Bachelorhood. Young single adult living apart from parents

Stage II—Honeymooners. Young married couple

Stage III—Parenthood. Married couple with at least one child living at home

Stage IV—Post parenthood. An older married couple with no children living at home

Stage V—Dissolution. One surviving spouse

Stage I—Bachelorhood

The first FLC stage consists of young single men and women who have establishedhouseholds apart from their parents. Most members of this FLC stage are fullyemployed; many are college or graduate students who have left their parents’homes. Young single adults are apt to spend their incomes on rent, basic homefurnishings, the purchase and maintenance of automobiles, travel and entertainment,and clothing and accessories. It is relatively easy to reach this segment becausemany special-interest publications target singles. Marriage marks the transitionfrom the bachelorhood stage to the honeymooner stage.

Stage II—Honeymooners

The honeymoon stage starts immediately after the marriage vows are taken andgenerally continues until the arrival of the couple’s first child. This FLC stage servesas a period of adjustment to married life. These couples have available a combinedincome that often permits a lifestyle that provides them with the opportunities ofmore indulgent purchasing of possessions or allows them to save or invest theirextra income. Honeymooners have considerable start-up expenses whenestablishing a new home (major and minor appliances, bedroom and living roomfurniture, carpeting, drapes, dishes, and a host of utensils and accessory items).

Stage III—Parenthood

When a couple has its first child, the honeymoon is considered over. The parenthoodstage (sometimes called the full-nest stage) usually extends over more than a 20-year period. Because of its long duration, this stage can be divided into shorterphases: Preschool phase, Elementary school phase, High school phase, and Collegephase.

Throughout these parenthood phases, the interrelationships of family membersand the structure of the family gradually change and the financial resources of thefamily change significantly. Many magazines cater to the information andentertainment needs of parents and children.


NOTES


Stage IV—Postparenthood

Postparenthood, when all the children have left home, is traumatic for some parentsand liberating for others. This so-called empty-nest stage signifies for many parentsalmost a ‘rebirth,’ a time for doing all the things they could not do while the childrenwere at home and they had to worry about soaring educational expenses. For themother, it is a time to further her education, to enter or re-enter the job market, toseek new interests. For the father, it is a time to indulge in new hobbies. For both,it is the time to travel, to entertain, perhaps to refurnish their home, or to sell it infavour of a new home or condominium.

Married couples tend to be most comfortable financially. Many empty nestersretire although they are still in good health. Older consumers tend to use televisionas an important source of information and entertainment. They favour programmesthat provide the opportunity to ‘keep up with what’s happening,’ especially newsand public affairs programmes.

Stage V—Dissolution

Dissolution of the basic family unit occurs with the death of one spouse. Thesurviving spouse (usually the wife) often tends to follow a more economical lifestyle.

It is possible to trace how the FLC concept impacts a single product orservice over time. Throughout the FLC, the priorities of the family members undergochanges. The type of products bought, and the amount of leisure time, priorities inlife, financial security, etc. change over various stages in the life cycle, thus callingfor differential investments in activities and products and services.

Modifications to the FLC

The traditional FLC model has lost some of its ability to represent the currentstages a family passes through. The underlying sociodemographic forces that drivethis expanded FLC model include divorce and late marriages, with and withoutthe presence of children. Although, the modified FLC model is more true to realityit only recognises those families that started in marriage, and tends to ignore suchsingle-parent households as unwed mothers and single persons who adopt a child.

Non-traditional FLC stages are derived from the dynamic socio-demographic forces operating during the past 25 or so years. These non-traditionalstages include not only family households but also non-family households: thoseconsisting of a single individual and those consisting of two or more unrelatedindividuals.

When households undergo status changes they become attractive targetsfor many marketers. In another sphere, the substantial increase in dual-incomehouseholds (i.e., working wives and the subset of working mothers) has also tendedto muddy the lifestyle assumptions implicit in the traditional FLC. The side-by-side existence of traditional and non-traditional FLC stages is another example of

NOTES



the contemporary marketplace which is complex in its diversity, and a challenge tosegment and serve.

Check Your Progress

5. Name the stages of parenthood phase.6. Give example of contemporary marketplace.


1. Consumer reference groups are groups that serve as frames of referencefor individuals in their purchase decisions.

2. Reference groups that serve as benchmarks for specific or narrowly-definedattitudes or behaviour are called comparative reference groups.

3. Five major types of reference group appeals in common marketing usageare:

Celebrity appeals Expert appeals Common man appeals Executive and employee appeals Trade or spokes-character appeals

4. A reference group appeal of based on testimonials of satisfied customers iscalled the common-man approach.

5. Because of the long duration of parenthood phase, it can be divided intoshorter phases: Preschool phase, Elementary school phase, High schoolphase, and College phase.

6. The side-by-side existence of traditional and non-traditional FLC stages isan example of the contemporary marketplace which is complex in itsdiversity, and a challenge to segment and serve.

9.5 SUMMARY

Consumer reference groups are groups that serve as frames of referencefor individuals in their purchase decisions. Examples of reference groupsinclude (1) friendship groups, (2) shopping groups, (3) work groups,(4) virtual groups or communities, and (5) consumer-action groups.

A group is two or more people who interact to accomplish either individualor mutual goals. This broad definition covers everything from intimate groupsto formal work groups.


NOTES


From a marketing perspective, reference groups are groups that serve asframes of reference for individuals in their purchase or consumption decisions.

Indirect reference groups consist of those individuals or groups with whoma person does not have direct face-to-face contact, such as movie stars,sports heroes, political leaders, TV personalities, or even a well-dressedand interesting looking person on a street corner.

The ability of reference groups to change consumer attitudes and behaviourby encouraging conformity is subject to the group’s ability to:

Inform or make the individual aware of a specific product or brand. Provide the individual with the opportunity to compare his or her own thinking

with the attitudes and behaviour of the group. Influence the individual to adopt attitudes and behaviour that are consistent

with the norms of the group. Legitimize the decision to use the same products as the group. A nonconformity appeal is also possible but requires a shift in attitudes or

behaviour. Five specific reference groups are considered because they give us a kind

of cross-section of the types of groups that influence consumers’ attitudesand behaviour. They are: friendship groups, shopping groups, work groups,virtual groups or communities and consumer-action groups.

Two or more people who shop together can be called a shopping group.The motivations range from primarily social to reducing risk. A special formof a shopping group is the in-home shopping party.

A consumer-action group has emerged in response to the consumeristmovement. It can be divided into two broad categories. Those that organizeto correct a specific consumer abuse and then disband. And, those thatorganize to address broader, more pervasive problem areas and operateover an extended or indefinite period of time.

Five major types of reference group appeals in common marketing usageare:

Celebrity appeals Expert appeals Common man appeals Executive and employee appeals Trade or spokes-character appeals

Celebrity credibility is a powerful influence. It is based on the audience’sperception of the celebrity’s expertise and trustworthiness. Not all companiesuse celebrities because they aren’t convinced they are worth the money.

NOTES



A reference group appeal of based on testimonials of satisfied customers iscalled the common-man approach. It demonstrates that someone just likethe customer is satisfied with the product or service. These commercialsare described as being slice-of-life commercials. Families are often depictedin ‘real-life’ situations in commercials.

Traditional family life cycle models have five basic stages:Stage I—Bachelorhood. Young single adult living apart from parentsStage II—Honeymooners. Young married coupleStage III—Parenthood. Married couple with at least one child livingat homeStage IV—Post parenthood. An older married couple with no childrenliving at homeStage V—Dissolution. One surviving spouse

Postparenthood, when all the children have left home, is traumatic for someparents and liberating for others. This so-called empty-nest stage signifiesfor many parents almost a ‘rebirth,’ a time for doing all the things they couldnot do while the children were at home and they had to worry about soaringeducational expenses. For the mother, it is a time to further her education,to enter or re-enter the job market, to seek new interests. For the father, itis a time to indulge in new hobbies.

Dissolution of the basic family unit occurs with the death of one spouse. Thesurviving spouse (usually the wife) often tends to follow a more economicallifestyle.

Throughout the FLC, the priorities of the family members undergo changes.The type of products bought, and the amount of leisure time, priorities inlife, financial security, etc. change over various stages in the life cycle, thuscalling for differential investments in activities and products and services.

9.6 KEY WORDS

Reference group: It is a social group which a person takes as a standardin forming attitudes and behaviour.

Slice-of-life commercial: It is a commercial with realistic representationof everyday experience in a film, play, or book.

Family life cycle: It is the emotional and intellectual stages one passesthrough from childhood to one’s retirement years as a member of a family.

Parenthood: It is the state of being a parent and the responsibilities involved.


NOTES




1. What are direct and indirect reference groups?2. What are the basic stages of traditional family life cycle models?3. How does postparenthood stage signify a rebirth for many parents?


1. Describe the factors that affect a reference group influence on an individual’sbehaviour.

2. Explain the types of reference groups.3. Elaborate on the modifications made to the FLC model.




Kumar, A, K Singh. 2013. Consumer Behaviour and Marketing Communication:An Indian Perspective, 1st Edition. New Delhi: Dreamtech Press.



NOTES


Decision Making

UNIT 10 DECISION MAKINGStructure

10.0 Introduction10.1 Objectives10.2 Nature of Household and Purchases and Family Decision Making and

Resolving Conflict10.3 Answers to Check Your Progress Questions10.4 Summary10.5 Key Words10.6 Self Assessment Questions and Exercises10.7 Further Readings

10.0 INTRODUCTION

To make a purchase, consumers identify their needs, gather information and analyseall alternatives. These activities are a part of consumer decision making process.The consumer behaviour may be determined by economic and psychological factorsand are influenced by environmental factors like social and cultural values.Consumers choose goods and services for consumption within the context of theirown and their household’s preferences and available resources. According to basiceconomic theory, households purchase foods and other market goods to maximizeutility, or well-being, based on their preferences and subject to the constraint thatthe cost of those goods is less than or equal to the sum of all sources of income.However, households are subject not only to an income constraint but also a timeconstraint. So, it becomes important to exercise a sound decision making. Theconsumer decision making behaviour is a complex procedure and involveseverything starting from problem recognition to post-purchase activities. Everyconsumer has different needs in their daily lives and these are the needs whichencourage them to make different decisions. Today, research on family roles inbuying decisions is becoming of increasing interest to those engaged in the marketingof goods and services. Marketing managers request information on family memberinvolvement in buying decisions to assist them in development of product offeringsand special promotions. Let us study in detail about the role of different familymembers’ decision making while making a purchase in the following unit.

10.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of family and nature of household and purchases Discuss the concept of family as a reference group

Decision Making

NOTES


Explain the consumer socialization State the functions of the family Describe the key family consumption roles Illustrate the family decision making and consumption related roles

10.2 NATURE OF HOUSEHOLD AND PURCHASESAND FAMILY DECISION MAKING ANDRESOLVING CONFLICT

The household is one of the most important social groups that exert influence onindividual decision making. The extent of these influences depends on the stage ofthe family life cycle as this determines the kind of decisions its members make. Thedemographic factors of age, marital status, and the presence of children in thefamily play a major role in shaping individual and joint purchase behaviour.Marketers and advertisers can use the information on the family life cycle to developstrategies that conform to the unique needs and circumstances of their targetmarkets. As the demographic structures of society change, the family life cycleitself may need to be modified as new types of family forms appear. As familieschange, marketers get opportunities to develop new products and reposition oldones.

The family also acts as one of the most important reference groups forindividual consumers. Discussions about products, brands and choice criteria occuroften among family members. Many products also involve joint decision-makingamong the members of a household. The desires, attitudes, incomes, culturalbackground, and personalities of family members play a crucial role in the overalloutcome of a particular decision.

Children learn various norms of consumption from family members first,making them the most important primary reference group. The specific culture,subculture and social class that a family belongs to, influences and shapes anindividual’s behaviour as a consumer for life.

Different members of the family play varying consumer roles depending onthe type of decision-making that is involved. Dynamics of group decision-makingapply in case of a purchase decision by a household unit. The differences in theinfluence of members usually stems from the type of product to be purchased. Forinstance, for groceries, the wife is the predominant influencer and buyer, while forfinancial products, it is the chief male member of the family and for a bike, ateenage kid in the family who have a predominant say. However, with changes inthe family structure, such stereotypes are undergoing a change. Role reversals orrole sharing is becoming more common. The role of wives in buying cars, orplanning investments, and the role of husbands in buying groceries cannot beunderestimated. And children are becoming more influential even for high

NOTES


Decision Makinginvolvement products such as cars, planning vacations, consumer durables, etc.besides becoming independent in taking decisions for products that are meant fortheir self-consumption. Therefore, marketers need to give careful consideration tothe dynamics of the household decision-making process while assessing the roleof each member in this group.

Family as a Reference Group

For many consumers their family is the primary reference group for many attitudesand behaviours. The family is the prime target market for most products and productcategories. As the most basic membership group, families are defined as two ormore persons related by blood, marriage, or adoption that reside together. Thereare three types of families: married couples, nuclear families, and extended families.Socialization is a core function of the family. Other functions of the family are theprovision of economic and emotional support and the pursuit of a suitable lifestylefor its members.

The members of a family assume specific roles in their everyday functioning—such roles or tasks extend to the realm of consumer purchase decisions. Keyconsumer-related roles of family members include influencers, gatekeepers,deciders, buyers, preparers, users, maintainers, and disposers. A family’s decision-making style is often influenced by its lifestyle, roles, and cultural factors.

The majority of consumer studies classify family consumption decisions ashusband-dominated, wife-dominated, joint, or autonomous decisions. The extentand nature of husband-wife influence in family decisions depends, in part, on thespecific product or service and selected cultural influences.

Classification of families by stage in the family life cycle (FLC) providesvaluable insights into family consumption-related behaviour. The traditional FLCbegins with bachelorhood, moves on to marriage, then to an expanding family, toa contracting family, and ends with the death of a spouse. Dynamicsociodemographic changes in society have resulted in many non-traditional stagesthat a family or non-family household might pass through (such as childless couples,couples marrying later in life, single parents, unmarried couples, or single-personhouseholds). These non-traditional stages are becoming increasingly important tomarketers in terms of specific market niches.

The Family is a Concept in Flux

The family is a basic concept in society but is not easy to define because familycomposition and structure, as well as the roles played by family members, arealmost always in transition. Traditionally, the family is defined as two or morepersons related by blood, marriage, or adoption who reside together.

Although families sometimes are referred to as households, not all householdsare families. Within the context of consumer behaviour, households and families

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usually are treated as synonymous. In most Western societies, three types of familiesdominate: the married couple, the nuclear family, and the extended family.Types include:

The married couple—a husband and wife is the simplest structure. The nuclear family—a husband and wife and one or more children. This is

still commonplace. The extended family—a husband, wife, one or more children, and at least

one grandparent. At one time this was the norm, but geographic mobilityhas reduced its presence.

A fourth form, the single-parent family—one parent and at least one child—is growing due to divorce, separation, and out-of-wedlock births.

The predominant form of the family is largely influenced by the culture within whichthe families exist.

Socialization of Family Members

The Socialization of family members is a central family function. In the case ofyoung children, this process includes imparting to children the basic values andmodes of behaviour consistent with the culture. These generally include moral andreligious principles, interpersonal skills, dress and grooming standards, appropriatemanners and speech, and the selection of suitable educational and occupational orcareer goals.

Marketers frequently target parents who are looking for assistance in thetask of socialising their children. To this end, marketers are sensitive to the factthat the Socialization of young children provides an opportunity to establish afoundation on which later experiences continue to build throughout life.

Consumer Socialization of Children

The aspect of childhood Socialization that is particularly relevant to the study ofconsumer behaviour is consumer Socialization, which is defined as the process bywhich children acquire the skills, knowledge, and attitudes necessary to functionas consumers. A variety of studies have focused on how children developconsumption skills.

Many preadolescent children acquire their consumer behaviour normsthrough observation of their parents and older siblings who function as role modelsand sources of cues for basic consumption learning. In contrast, adolescents andteenagers are likely to look to their friends for models of acceptable consumptionbehaviour. Shared shopping experiences (i.e., co-shopping, when mother andchild shop together) also give children the opportunity to acquire in-store shoppingskills. Co-shopping is a way of spending time with one’s children while at thesame time accomplishing a necessary task.

NOTES


Decision MakingConsumer Socialization also serves as a tool by which parents influenceother aspects of the Socialization process. For instance, parents frequently use thepromise or reward of material goods as a device to modify or control a child’sbehaviour. According to research, adolescents reported that their parents frequentlyused the promise of chocolate candy as a means of controlling their behaviour(e.g. getting them to complete homework or to clean their rooms).

Adult Consumer Socialization begins in early childhood and extendsthroughout a person’s entire life.

Intergenerational Socialization: It is common for product or brand loyaltyor preference to be passed from one generation to another, sometimes up to threeor four generations.

Other Functions of the Family

Other basic functions of the family include economic well-being, emotional support,and suitable family lifestyles.Economic Well-Being

Providing financial means to its dependents is unquestionably a basic family function.How the family divides its responsibilities for providing economic well-being haschanged considerably during the past twenty-five years. No longer are the traditionalroles of husband as economic provider and wife as homemaker and child-rearervalid. It is very common for married women with children to be employed outsidethe home and for their husbands to share household responsibilities.

The economic role of children also has changed. Today, although manyteenage children work, they rarely assist the family financially. Teenagers areexpected to pay for their own amusements; others contribute to the costs of theirformal education and prepare themselves to be financially independent.

Emotional Support

The provision of emotional nourishment (including love, affection, and intimacy) toits members is an important core function of the contemporary family. The familyprovides support and encouragement and assists its members in coping with decisionmaking and personal or social problems. If the family cannot provide adequateassistance when it is needed, it may turn to a counsellor, psychologist or otherhelping professional as an alternative.

Suitable Family Lifestyles

Another important family function in terms of consumer behaviour is theestablishment of a suitable lifestyle for the family. Upbringing, experience, and thepersonal and jointly held goals of the spouses determine the importance placed oneducation or career, on reading, television viewing, the learning of computer skills,the frequency and quality of dining out, and on the selection of other entertainment

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and recreational activities. Family lifestyle commitments, including the allocationof time is greatly influencing consumption patterns.

Family Decision-Making and Consumption-Related Roles

Marketers most frequently examine the attitudes and behaviour of the one familymember whom they believe to be the major decision maker. Sometimes they alsoexamine the attitudes and behaviour of the person most likely to be the primaryuser of the product or service.

Key Family Consumption Roles

For a family to function as a cohesive unit, various tasks must be carried out byone or more family members. In a dynamic society, family-related duties areconstantly changing. We can identify eight distinct roles in the family decision-making process. The number and identity of the family members who fill theseroles vary from family to family and from product to product.The eight roles in the family decision-making process include:

Influencers—family member(s) who provide information to other membersabout a product or service.

Gatekeepers—family member(s) who control the flow of information abouta product or service into the family.

Deciders—family member(s) with the power to determine unilaterally orjointly whether to shop for, purchase, use, consume, or dispose of a specificproduct or service.

Buyers—family member(s) who make the actual purchase of a particularproduct or service.

Preparers—family member(s) who transform the product into a form suitablefor consumption by other family members.

Users—family member(s) who use or consume a particular product orservice.

Maintainers—family member(s) who service or repair the product so that itwill provide continued satisfaction.

Disposers—family member(s) who initiate or carry out the disposal ordiscontinuation of a particular product or service.

Dynamics of Husband-Wife Decision Making

Marketers are interested in the relative amount of influence that a husband and awife have when it comes to family consumption choices. Family consumptiondecisions can be classified as:

Husband dominated

NOTES


Decision Making Wife dominated Joint—equal or syncretic Autonomic—solitary or unilateral

The relative influence of a husband and wife on a particular consumer decisiondepends in part on the product and service category. It changes over time.Husband-wife decision-making also appears to be related to cultural influence. Inthe People’s Republic of China, there were substantially fewer ‘joint’ decisionsand more ‘husband-dominated’ decisions for many household purchases thanamong Chinese in the United States. In another recent cross-cultural study, husband-wife decision-making was studied among three groups: Asian-Indians living inIndia, Asian-Indians living in the United States, and American nationals. Resultsshow a decrease in husband-dominated decisions and an increase in wife-dominateddecisions, going from Asian-Indians in India, to Asian-Indians in the United States,to American nationals.

Check Your Progress

1. How can marketers and advertisers use the information on the family lifecycle?

2. Name the key consumer-related roles of family members in their everydayfunctioning.

3. Define consumer Socialization of children.


1. Marketers and advertisers can use the information on the family life cycle todevelop strategies that conform to the unique needs and circumstances oftheir target markets.

2. Key consumer-related roles of family members include influencers,gatekeepers, deciders, buyers, preparers, users, maintainers, and disposers.

3. Consumer Socialization of children is defined as the process by which childrenacquire the skills, knowledge, and attitudes necessary to function asconsumers.

10.4 SUMMARY

Marketers and advertisers can use the information on the family life cycle todevelop strategies that conform to the unique needs and circumstances oftheir target markets. As the demographic structures of society change, thefamily life cycle itself may need to be modified as new types of family forms

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appear. As families change, marketers get opportunities to develop newproducts and reposition old ones.

Children learn various norms of consumption from family members first,making them the most important primary reference group. The specific culture,subculture and social class that a family belongs to, influences and shapesan individual’s behaviour as a consumer for life.

Different members of the family play varying consumer roles depending onthe type of decision-making that is involved. Dynamics of group decision-making apply in case of a purchase decision by a household unit.

The family is the prime target market for most products and productcategories.

Classification of families by stage in the family life cycle (FLC) providesvaluable insights into family consumption-related behaviour. The traditionalFLC begins with bachelorhood, moves on to marriage, then to an expandingfamily, to a contracting family, and ends with the death of a spouse.

Although families sometimes are referred to as households, not all householdsare families. Within the context of consumer behaviour, households andfamilies usually are treated as synonymous. In most Western societies, threetypes of families dominate: the married couple, the nuclear family, and theextended family.

The Socialization of family members is a central family function. In the caseof young children, this process includes imparting to children the basic valuesand modes of behaviour consistent with the culture. These generally includemoral and religious principles, interpersonal skills, dress and groomingstandards, appropriate manners and speech, and the selection of suitableeducational and occupational or career goals.

Consumer Socialization also serves as a tool by which parents influenceother aspects of the Socialization process.

Other basic functions of the family include economic well-being, emotionalsupport, and suitable family lifestyles.

The eight roles in the family decision-making process include: influencers,gatekeepers, deciders, buyers, preparers, users, maintainers and disposers.

The relative influence of a husband and wife on a particular consumerdecision depends in part on the product and service category. It changesover time. Husband-wife decision-making also appears to be related tocultural influence.

10.5 KEY WORDS

Household: It refers to a house and its occupants regarded as a unit.

NOTES


Decision Making Socialization: it is the process of learning to behave in a way that isacceptable to society.

Decision making: It is the action or process of making important decisions. Family consumption: It is the purchases made by resident households

(home or abroad) to meet their everyday needs: food, clothing, housingservices (rents), energy, transport, durable goods (notably cars), spendingon health, on leisure and on miscellaneous services.



1. How do differences in the influence of members usually stem from the typeof product to be purchased? Give example.

2. State the types of families in Western societies.3. What is the Socialization of family members?4. Classify the family consumption decisions.


1. ‘For many consumers their family is the primary reference group for manyattitudes and behaviours.’ Elucidate the statement.

2. Explain the other functions of a family.3. Describe the eight roles in the family decision-making process.







Social Class

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UNIT 11 SOCIAL CLASSStructure

11.0 Introduction11.1 Objectives11.2 Social Class: Nature

11.2.1 Money and Social Class11.2.2 Symbols of Status

11.3 Social Class Categories and Consumer Behaviour11.4 Answers to Check Your Progress Questions11.5 Summary11.6 Key Words11.7 Self Assessment Questions and Exercises11.8 Further Readings

11.0 INTRODUCTION

Many social scientists agree that society is stratified into a hierarchical arrangementof social classes that are groupings of individuals in a hierarchy, usually based onwealth, educational attainment, occupation, income, and membership in a subcultureor social network. Social class is sometimes presented as a description of howmembers of society have sorted themselves along a continuum of positions varyingin importance, influence, prestige, and compensation. The amount of money aperson has plays an important role in defining his social class. After the introductionof new economic policy in 1990-91, the middle income group has gained popularityamong the marketers due to its large share in society. This unit deals with the typeof activities different social classes indulge in, like lower class consumers will preferwatching television in their leisure whereas an upper class consumer will considergoing to theatre or attend a sports match. Let us study in detail about the nature ofsocial class and the behaviour of the consumers belonging to different social classes.

11.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of social class and its nature Discuss the influence of money on social class and symbol of status in the

context of consumer behaviour Explain the differences among lower, middle and upper classes of consumers

NOTES


Social Class11.2 SOCIAL CLASS: NATURE

The term ‘social class’ comprises ‘social’ as an adjective of the noun ‘class’. Thecombined use of these two terms may change the connotation. So we discussthese as one single ‘construct’.

The origin of the usage of the concept of ‘social class’ may be dated to firstthree decades of the 19th century. During the period preceding this period, ‘rankand order’ were the terms commonly used to describe one’s social status andeconomic standing in the society, especially British society. The switching overfrom ‘rank and order’ to ‘social class’ was not merely a change of words, but italso embodied representation of a significant shift in the basis of stratification andfixation of an individual’s place and importance in society. ‘Rank and order’embodied feudalistic connotation in so far as they depicted a person’s status thatdepended upon ownership of land, which was the main factor or means ofproduction and exclusively representative of wealth. This makes it clear that ‘rankand order’ were derived from possession of wealth and the means of productionwhich were identified with land. But, the ownership of land under feudalism washereditary. Besides, the dominant thought prevailing in society at that time was thatqualities of head and heart of a human being depended on hereditary factors.Naturally, individual attainments and qualities acquired by one’s own efforts wereovershadowed by social class origins. Accident of birth was the main determinantof social class. When ‘class’ replaced the usage of ‘rank and order,’ it signified animportant shift in social thoughts and values. Maturing of industrialization broughtabout a radical transformation in institutions and structure of society and organizationof economy, especially in production and its structure. Land is no more the mainmeans of production; it has been replaced by capital. Unlike land, capital is not agift of nature; it is not only made by humans, its stock at any point in time alsodepends on accumulation of the past. This provides us an understanding of theshift in emphasis. Human beings, rather than nature, governed the economy and itsgrowth at macro level, while economic condition of a human being was supposedto be determined by individual industry, patience, enterprise, skills and ability.

All people are supposed to be born equal, yet some are born more equalthan others, as George Orwell said. Even among those born as equals, somebecome more equal than others on the basis of their achievements in life.

Humans, rather than nature, governed the economy and its growth at macrolevel, while economic condition of a human being was supposed to be determinedby individual industry, patience, enterprise, skills and ability. Differential standingand position in society leads to classification into different categories or classes.Differentiation on the basis of standing and respect, that different personscommand, leads to social stratification. Originally, caste came to be associatedwith the occupation of a person, though birth became its basis later.

Inequality, in this context, refers to the difference in status. Therefore, thisfacet refers to status and standing in society that a person enjoys. Differential

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standing and position in society leads to classification into different categories orclasses. Differentiation on the basis of standing and respect, that different personscommand, leads to social stratification. Each stratum differs from other strata inone or more attributes. Different social strata have come to be known by a castewhich also reflected social status. Each social stratum is also known as socialclass; it is associated both with social and economic factors. The process of socialclass formation has coincided with caste system in India due to numerous factors,including economic factors. Originally, caste came to be associated with theoccupation of a person, though birth became its basis later. This brought about (i)a certain degree of rigidity in social structure and, (ii) mixing of hereditary withmaterial accomplishments, specially income and wealth, in social classification andcategorization. This, in technical terms, is called stratification. Social stratificationrefers to the process and its outcome that ascribe status and position to differentsections of population. Rank and order of different strata and individual memberswithin each stratum depict differential social and economic positions and powerthat is embodied in each rank or position. The majority of persons of a givensocial class or stratum occupy almost an equal rank or position, though a fewindividuals may have lower or higher ranks within the stratum.

For example, even among large corporate houses, Tata, Birla and Relianceoccupy the top position. This also holds true for other areas of operations. Theseranks are partly earned and may partly be inherited. Social-political and economicachievements depend upon the availability of opportunity and its exploitation byindividuals. Access to opportunity is as important as its effective utilization. It isprobably for this reason that Tony remarked, ‘the sons of the rich have to wait forthe opportunity to emerge so as to exploit it, whereas the sons of the poor or notso rich have to create the opportunity and use it effectively.’ Thus, our view runscounter to Donald and Carn’s postulation that positions in society ‘may be achievedrather than ascribed, with some opportunity existing for upward or downwardmovement to other classes.’ Schiffman-Kanuk also define social class as ‘thedivision of members of a society into a hierarchy of distinct status classes, so thatmembers of each class have relatively the same status and members of all otherclasses have either more or less status’. Thus, they also associate differential statusaccorded to different groups of individuals as the basis of social class formation.They describe status in the following words, status is frequently thought of as therelative rankings of members of each social class in terms of specific status factors.They associate the following as the criteria of ranking and delineation of status:Wealth or value of economic assets possessed by an individual, power that isdepicted by influence exercised over others and prestige that is reflected by degreeof recognition and respect commanded from others. These determinants of statusare economic, political, social and professional in nature. But, status is partly, ifnot wholly, derived from the accident of birth in a low or high status family andindividual accomplishments, specially education, occupation and income. Our viewdiffers slightly from that of Schiffman-Kanuk in so far as we consider family

NOTES


Social Classbackground to be an important determinant of status in Indian society. Besides,ranking or status of individuals depends upon the criteria used for the purposewhich tend to differ from country to country and time to time. In the pre-Independence period, landlords, advocates, government servants and people bornin affluent and socially upper caste families enjoyed higher status.

Individuals, rather than the class as a whole, are ranked and rankings are affectedby (i) personal bias and perception of those who judge and, (ii) criteria employed.It can, therefore, not be an objective method of measurement of social class. J SMill emphasized that comparison can be made between comparables.Comparability requires equality or similarity in all respects but status of two ormore set of conditions or individuals or classes.

This changed after independence. In the first four decades afterindependence, government and public enterprises were the largest employers inthe country because people attached a high degree of importance to job security,seniority based promotion and power and prestige associated with the governmentjobs.

Social classes are based on the very differentials which are required to be absentfor the use of method of comparison. Sentiment of following the path/ lead givenby a successful role model operates in positive direction as an incentive andinspiration to scale the similar heights through personal endeavours. The secondsentiment is that of competitiveness with the rivals, who are often likely to beequals. The third sentiment is of envy.

After the adoption of new economic policy in 1990–91, more and moreyoung men and women are opting for jobs in the private sector, where individualskills and performance are considered relatively more important; higher performingindividuals rise rapidly in occupational hierarchy and earn much more than those ingovernment jobs. Besides, individuals rather than the class as a whole are ranked,while rankings are affected by (i) personal bias and perception of those who judgeand, (ii) criteria employed. It can, therefore, not be an objective method ofmeasurement of social class.

Comparison of two instances, which resemble in all aspects, except that in onecase a certain cause is present, while in the other it is absent; effects of thatcause are, thus, made manifest by the difference that emerges from analysisbased on comparison. In the context of consumer behaviour, difference in socialclass becomes manifest in the level and style of living.

All the same, status based on rankings has been used in literature as animportant paradigm. Social class and status are important for the analysis ofconsumer behaviour from the viewpoint of social comparison theory. The theoryis quasi psychological and quasi social. Naturally, it uses both social andpsychological factors for comparison. In order to consider social comparison theory,one has to bear in mind what JS Mill emphasized (1843) that comparison is themethod of difference but comparison requires equality or similarity between all butone aspect; so, only comparables may be compared. In the context of consumerbehaviour, comparability requires difference in social class or status and no

Social Class

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differentials in rest of the facets. Mill’s method of difference involves comparisonof two instances, which resemble one another in all material aspects, except that inone a certain cause is present, while in another it is absent; effects of that cause aremade manifest by the difference that emerges from analysis based on comparison.In case of consumer behaviour, difference pertains to style and the level of living ofdifferent classes that is assumed to have arisen from class difference. But, socialclasses are based on the very differentials that are required to be constant forcomparison. It is extremely difficult, if not impossible, to find two different classeswhich are similar in all respects but one. Individuals are driven by mutually oppositedirectionally operating psychological factors. One factor is the feeling of envy: ‘thefeeling that it does not matter if I do not get some thing but my neighbour shouldnot receive it either.’ That is what the advertisement of one TV model tries toexploit by proclaiming ‘owner’s pride and neighbour’s envy’. Thus, the sentimentof envy is well-recognized by marketers, though the theory does not seem to useit as its base. Neighbour, in this context, may connote a colleague, an acquaintance,a friend or a relative. This is a negatively driving sentiment. This sentiment hasbeen recognized by Ando-Modigliani and Dussenberry in their consumer behaviourtheory. The third sentiment is that of competitiveness with the rivals, who are oftenlikely to be equals. This sentiment drives individuals to reach and maintain the styleand standard of living of the social class they belong to. This has also been well-recognized in the role of demonstration effect in shaping and guiding consumptiondecisions. But, what the conventional version of social comparison theoryemphasizes is that individuals often compare their material possessions with othersin order to determine their social standing. But, the fact is that people of a givenclass tend to compare their standard and style of living with those who belong tothe same social class with a view to match the styles of equals. But, materialpossessions pertain not only to standard and style of living but to wealth in itstotality. All wealth is neither income yielding nor is it liquid to be used forconsumption. This is not a practical and pragmatic approach. Many persons receivean immense amount of wealth and other forms of fortunes by inheritance.

All wealth is neither income yielding nor is it liquid to be used for consumption.Approach, based on wealth, is not a practical and pragmatic approach. Manypersons receive an immense amount of wealth and other forms of fortunes byinheritance. The temporal flow of income and hence, purchasing power, is themost relevant factor of status and social class so far as consumer behaviour isconcerned.

Family business passes from older to younger generation of the family. Everyone cannot be the owner of family business. The temporal flow of income andhence, purchasing power, is the most relevant factor of status and social class inso far as consumer behaviour is concerned. Therefore, what needs emphasis inthis context is this economic factor rather than social-psychological factors.Psychological and social factors will lead nowhere if they are not supported bypurchasing power. The ownership of consumer durables not only serves the purposeof conferring comforts and conveniences on users, but these also act as indicators

NOTES


Social Classof status. These are acquired through the use of purchasing power. This is, however,true for expensive and not yet commonly used durables. The fact is that a newlylaunched product is produced in a limited quantity because of uncertainty about itsreceptivity by consumers; its initial limited production operates as an explorer ofthe market. The limited scale of production and heavy expenditure incurred in theR&D used for its development make its cost and hence, price, high. But, a successfullaunch tends to be followed by rising scale of production by the innovating firm,which in due course is followed by imitations of the successful product of theinnovating firm. Both these factors reduce price and raise supply to lead to thefinal positioning of once status symbol to become a common item of ownershipand use. Thus, the status symbols, embodied in durable goods, continuously change.

11.2.1 Money and Social Class

Income plays an important role in social class formation. Prominence of incomeamong determinants of social class arises from the fact that social and psychologicalfactors are often dominated by economic factors and income and wealth are themajor determinants among economic factors. Income depends on the stage ofdevelopment of the economy. In the lower stages of growth, incomes of the peopletend to be low. The emergence of middle class in India has been extremely slowbecause of slowness of economic growth. In early stages, society comprised onlyhigh and low income classes. It may be an intuitive guess to identify the emergenceof middle income/social class with the period of consolidation of the Mughal Empirein India. The middle social class/income group is referred to as middle class.Similarly, the other two income groups are also referred to as upper and lowersocial classes. Though the middle class started emerging substantially in the Britishperiod, the process of middle class formation gathered momentum in postindependent India as economic development was accelerated under Five Yearplans of development.

After the adoption of the new economic policy in 1990–91, the Indian middleclass has not only become the centre of global attention as an important segmentof the large Indian market, but it is dominant both in size and economic standing.Currently, society comprises three social classes. Three-fold classification isonly at a highly broad level. The classification into classes highlights inter-classdifferentials and overlooks several intra-class differentials. Intra-class differentialsin practically all three classes may be as important as inter-class differences.

After the adoption of new economic policy in 1990–91, the Indian middleclass has not only become the centre of global attention as an important segmentof the large Indian market, but it has become dominant both in size and economicstanding. Currently, society comprises three social classes. Three-fold classificationis only at a highly broad level. The classification into classes highlights inter-classdifferentials and overlooks several intra-class differentials. Intra-class differentialsin practically all three classes may be as important as inter-class differences.

Social Class

NOTES


We shall later consider intra-class differences to further classify classes intosub-classes. First, we shall consider the concept of status and important attributesof social classes at a broad level.

11.2.2 Symbols of Status

In the context of consumer behaviour, status symbols have an importance of theirown. Purchase of goods and services is guided partly by functionality and partlyby sociality. The role of functionality of purchases depends on the usefulness ofthe product or service with respect to the satisfaction of wants that fall in thedomain of necessities or comforts and conveniences. But sociality of the purchasesis derived from the status symbol that is associated with the possession or use ofa particular product or service in the given time–space configuration. ThorsteinVeblen, the founder of institutional economics, was the first economist whopropounded the idea of sociality which is embodied in conspicuous consumption.He pointed out that some members of each social class tend to engage inconspicuous consumption, while others spend more conservatively. Sociality ofconsumption is encompassed in the institutional and organizational structure ofsociety. But, what is conspicuous? The literal meaning of conspicuous is ‘striking,’eye-catching’ and ‘prominent.’ All these three words connote ‘something that isradically different’ from commonly used goods. Conspicuous consumption naturallyis assumed to put a person in an exclusive class/category which is different fromthe class/category of commoners. It is not that goods of conspicuous consumptionhave no functionality, they do have functionality to the extent to which these goodsalso satisfy some want. But, conspicuousness arises from two factors: (i) pricethat is not within the affordability of most of the members of society (ii) limitednumber of users of such goods at the given time and place. Then, some goods arepurchased for display to others. Decoration or rare pieces of art, etc., fall in thiscategory.

Some members of each social class tend to engage in conspicuous consumption,while others spend more conservatively.’ Sociality of consumption isencompassed in the institutional and organizational structure of society. Theconspicuous attribute arises from two factors: (i) price that is not within theaffordability of most of the members of society, (ii) limited number of users ofsuch goods at the given time and place. If a product or service becomes an itemof common use, it loses its status symbol. Any product or service will embodystatus symbolism so long as it remains affordable to a few elites of society. Inother words, relative scarcity, resulting in high price, defines goods and servicesto be a status symbol.

For example, after the Green Revolution in Punjab, rich farmers spent asubstantial proportion of their income conspicuously. They substituted countryliquor with imported or foreign liquor made in India (FLMI) and they also spentlavishly on social ceremonies like marriages, birthdays, etc. When most Indianswere using bicycles or public transport, the possession of a car embodied statussymbolism. This is no more the case. Similarly, an air journey was undertaken

NOTES


Social Classmainly for going abroad up to the 1980s, while only a few rich, politicians, highprofile bureaucrats and businessmen travelled by plane domestically. Air traveland even travel by AC II was a status symbol then. But, a continuous growth ofincome, resulting in continuous addition of numbers to middle and high incomegroups, has made the use of such goods earlier considered a status symbol, almostcommon. We may infer that if a product or service becomes an item of commonuse, it loses its status symbolism. Any product or service will be considered astatus symbol so long as it remains affordable to a few elites of society. In otherwords, relative scarcity, resulting in high price, defines goods and services to be astatus symbol. This point has been emphasized aptly by Marshall (1891) in thecontext of education. He says, ‘if most people become literate, then literacy willno more be a qualification.’ This applies to higher educational qualifications also.

Check Your Progress

1. What leads to social stratification?2. When does an item lose its status symbolism?

11.3 SOCIAL CLASS CATEGORIES ANDCONSUMER BEHAVIOUR

While social stratification does not explain all consumption behaviours, it is certainlyrelevant for some product categories. The first task marketers must perform is todetermine for their product categories, which aspects of the consumption processare affected by the social class. This will generally require research in which relevantmeasures of social class are taken and associated with product/brand usage,purchase motivation, outlet selection, media usage, etc.

Product/brand utilisation often varies widely across social classes. Incomeclearly restricts the purchase of some products such as expensive cars, perfumes,etc. Education often influences consumption of fine art as well as mass media.Occupation is closely related to leisure activities.

A product/brand has different meanings for members of different socialclasses. Different purchase motivations exist for the same product across varioussocial classes. Individuals in higher socioeconomic classes use the credit card forpaying off for convenience, while those in the lower socioeconomic classes mayuse the credit card to pay in instalments.

Having selected a segment based on usage rate, purchase motivation, orproduct/brand meaning, the marketer must position the brand in a manner consistentwith the desired target market.

Social Class

NOTES


Clothing, Fashion, and Shopping

Most people dress to fit their self-images, which include their perceptions of theirown social class membership. Members of specific social classes differ in terms ofwhat they consider fashionable or in good taste.

Lower middle-class consumers have a strong preference for T-shirts, caps,and other clothing that offer an external point of identification. Upper-classconsumers are likely to buy clothing that is free from such supporting associations.Upper-class consumers also seek clothing with a more subtle look. Social class isalso an important variable in determining where a consumer shops.

The Pursuit of Leisure

Social class membership is also closely related to the choice of recreational andleisure-time activities. Upper-class consumers are likely to go to theatre andconcerts, to play bridge, and to attend college football games. Lower-classconsumers tend to be avid television watchers. Over the past decade or so,however, a number of changes are increasingly being observed that point to afurther blurring of social-class lines with regard to leisure interests.

Saving and Spending

Saving, spending, and credit card usage all seem to be related to social classstanding. Upper-class consumers are more future-oriented and confident of theirfinancial acumen; they are more willing to invest in insurance, stocks, and realestate. In comparison, lower-class consumers are generally more concerned withimmediate gratification; when they do save, they are primarily interested in safetyand security.

Social Class and Communication

Social class groupings differ in terms of their media habits and in how they transmitand receive communications. When it comes to describing their world, lower-class consumers tend to portray it in rather personal and concrete terms, althoughmiddle-class consumers are able to describe their experiences from a number ofdifferent perspectives. Such variations in response indicate that middle-classconsumers have a broader or more general view of the world, although lower-class consumers tend to have a narrow or personal view, seeing the world throughtheir own immediate experiences.

Regional differences in terminology, choice of words and phrases, andpatterns of usage also tend to increase as we move down the social class ladder.Selective exposure to various types of mass media differs by social class. Highersocial class members tend to prefer current events and drama, although lower-class individuals tend to prefer soap operas, quiz shows, and situation comedies.Higher-class consumers tend to have greater exposure to magazines andnewspapers than their lower-class counterparts. Lower-class consumers are likely

NOTES


Social Classto have greater exposure to publications that dramatize romance and the lifestylesof movie and television celebrities.

Check Your Progress

3. What is the behaviour of consumers belonging to different social classes interms of saving and spending?

4. How do lower-class consumers and middle-class consumers describe theirworld?


1. Differentiation on the basis of standing and respect, that different personscommand, leads to social stratification.

2. If a product or service becomes an item of common use, it loses its statussymbolism.

3. Upper-class consumers are more future-oriented and confident of theirfinancial acumen; they are more willing to invest in insurance, stocks, andreal estate. In comparison, lower-class consumers are generally moreconcerned with immediate gratification; when they do save, they are primarilyinterested in safety and security.

4. When it comes to describing their world, lower-class consumers tend toportray it in rather personal and concrete terms, although middle-classconsumers are able to describe their experiences from a number of differentperspectives.

11.5 SUMMARY

Differential standing and position in society leads to classification into differentcategories or classes. Differentiation on the basis of standing and respect,that different persons command, leads to social stratification. Each stratumdiffers from other strata in one or more attributes. Different social stratahave come to be known by a caste which also reflected social status. Eachsocial stratum is also known as social class; it is associated both with socialand economic factors.

Social stratification refers to the process and its outcome that ascribe statusand position to different sections of population. Rank and order of differentstrata and individual members within each stratum depict differential socialand economic positions and power that is embodied in each rank or position.

Social Class

NOTES


Social-political and economic achievements depend upon the availability ofopportunity and its exploitation by individuals. Access to opportunity is asimportant as its effective utilization.

After the adoption of new economic policy in 1990–91, more and moreyoung men and women are opting for jobs in the private sector, whereindividual skills and performance are considered relatively more important;higher performing individuals rise rapidly in occupational hierarchy and earnmuch more than those in government jobs.

In the context of consumer behaviour, comparability requires difference insocial class or status and no differentials in rest of the facets. Mill’s methodof difference involves comparison of two instances, which resemble oneanother in all material aspects, except that in one a certain cause is present,while in another it is absent; effects of that cause are made manifest by thedifference that emerges from analysis based on comparison. In case ofconsumer behaviour, difference pertains to style and the level of living ofdifferent classes that is assumed to have arisen from class difference.

The temporal flow of income and hence, purchasing power, is the mostrelevant factor of status and social class in so far as consumer behaviour isconcerned. Therefore, what needs emphasis in this context is this economicfactor rather than social-psychological factors. Psychological and socialfactors will lead nowhere if they are not supported by purchasing power.

Income plays an important role in social class formation. Prominence ofincome among determinants of social class arises from the fact that socialand psychological factors are often dominated by economic factors andincome and wealth are the major determinants among economic factors.Income depends on the stage of development of the economy.

The middle social class/income group is referred to as middle class. Similarly,the other two income groups are also referred to as upper and lower socialclasses.

After the adoption of new economic policy in 1990–91, the Indian middleclass has not only become the centre of global attention as an importantsegment of the large Indian market, but it has become dominant both in sizeand economic standing.

In the context of consumer behaviour, status symbols have an importanceof their own. Purchase of goods and services is guided partly by functionalityand partly by sociality. The role of functionality of purchases depends onthe usefulness of the product or service with respect to the satisfaction ofwants that fall in the domain of necessities or comforts and conveniences.But sociality of the purchases is derived from the status symbol that isassociated with the possession or use of a particular product or service inthe given time–space configuration.

NOTES


Social Class If a product or service becomes an item of common use, it loses its statussymbol. Any product or service will embody status symbolism so long as itremains affordable to a few elites of society. In other words, relative scarcity,resulting in high price, defines goods and services to be a status symbol.

Product/brand utilisation often varies widely across social classes. Educationoften influences consumption of fine art as well as mass media. Occupationis closely related to leisure activities.

Social class membership is also closely related to the choice of recreationaland leisure-time activities. Upper-class consumers are likely to go to theatreand concerts, to play bridge, and to attend college football games. Lower-class consumers tend to be avid television watchers.

When it comes to describing their world, lower-class consumers tend toportray it in rather personal and concrete terms, although middle-classconsumers are able to describe their experiences from a number of differentperspectives. Such variations in response indicate that middle-classconsumers have a broader or more general view of the world, althoughlower-class consumers tend to have a narrow or personal view, seeing theworld through their own immediate experiences.

11.6 KEY WORDS

Social class: It is a division of a society based on social and economicstatus.

Comparability: It is the fact or quality of being similar and able to becompared.

Functionality: It is the fact or quality of being similar and able to becompared.

Sociality: It is the degree to which individuals in an animal population tendto associate in social groups and form cooperative societies.



1. How do the marketers exploit the envy factor?2. How is the purchase of goods and services guided partly by functionality

and partly by sociality?

Social Class

NOTES



1. ‘Psychological and social factors will lead nowhere if they are not supportedby purchasing power.’ Explain.

2. ‘Relative scarcity, resulting in high price, defines goods and services to be astatus symbol.’ Elucidate the statement with the help of examples.







NOTES


Consumer DecisionMakingBLOCK - IV

DECISION OF CONSUMERS

UNIT 12 CONSUMER DECISIONMAKING

Structure12.0 Introduction12.1 Objectives12.2 Stages in Consumer Decision Process – Situational Influence, Problem

Recognition12.2.1 Factors Influencing Buying Decision: Situational Influence, Personal and

Social Influence, etc.12.2.2 Problem Recognition

12.3 Answers to Check Your Progress Questions12.4 Summary12.5 Key Words12.6 Self Assessment Questions and Exercises12.7 Further Readings

12.0 INTRODUCTION

For many goods and services, the purchasing behaviour is a routine practice inwhich the aroused need is satisfied in a habitual manner by repurchasing thesame brand. In such scenario, good past experience with the utility of the productcomes into play. This is called simple or routine decision making. However, ifsomething changes appreciably (price, product, availability, services), theconsumer may re-enter the full or extended decision making process and consideralternative brands. This process by which consumers become aware of andidentify their needs; collect information on how to best solve these needs; evaluatealternative available options; make a purchasing decision; and evaluate theirpurchase is called consumer decision making. Let us study in detail about it inthe following unit.

12.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning of consumer decision making Explain the ways of analysing consumer buying decisions

Consumer DecisionMaking

NOTES


12.2 STAGES IN CONSUMER DECISION PROCESS– SITUATIONAL INFLUENCE, PROBLEMRECOGNITION

Consumers are never completely rational while making purchase decisions. Acompletely rational decision would require, before purchase, the analysis of thefeatures and characteristics of a product as well as other similar competing products.Moreover, this is not possible due to two reasons. First, consumers have limitedmental resources; second, they have limited free time. Marketers can use thesefactors to their benefit.

There are two major kinds of mental processing a consumer can make totackle a problem at hand. One is systematic processing, which involves in-depthanalysis and scrutiny of every stimulus in the environment. The other is heuristicprocessing, where one takes mental short-cuts to arrive at a decision. One of themore popular heuristic decisions that human beings seem to take is the ‘like-agree’heuristic, where consumers tend to make similar decisions to the ones taken bypeople they like.

When one makes a decision to solve a problem at hand, it is called problemsolving. Figure 12.1 demonstrates the systematic procedure that buyers undertakein order to select the appropriate purchase that can solve their problem.

Fig. 12.1 Consumer Decision-Making Process

The decision-making process undertaken by consumers regarding potential markettransaction before, during, and after buying a product or service is called‘Consumer Decision-Making Process’.

NOTES



In general, decision-making is the logical process of picking a course ofaction from several alternatives. For example, shopping, or deciding what food toeat. Decision-making is deemed to be a psychological construct where there hasto be commitment to action. That is, assuming, based on observation, that peoplehave made a commitment to effect the action.

There are three ways of analysing consumer buying decisions: Economic models: Largely quantitative, they are based on the predictions

of the consumer’s rationality and his near-perfect knowledge. In this case,consumers maximize their utility.

Psychological models: These models are focused on cognitive andpsychological processes. Motivation and need recognition are two examplesof this model. These models are more qualitative and they build onsociological factors, like cultural and family influences.

Consumer behaviour models: Majority of the marketers use these models.They typically are a mix of economic and psychological models.

According to Nobel laureate Herbert Simon, it is impossible for human beingsto be completely rational during economic decision-making. He says that a completeanalysis would make a decision complex. Simon also claims that the ability ofhuman beings to process information is very limited. Buyers’ decisions are oftenaffected by emotional and non-rational considerations. Their attempts at beingrational are only partly successful.

12.2.1 Factors Influencing Buying Decision: Situational Influence,Personal and Social Influence, etc.

There are several factors which influence the buying decision. These can be broadlycategorised as situational, personal, social and other factors. Where situationalfactors include decisions related to choice criteria or buying task, and marketoffering, personal influences include factor like learning, attitude, perception, etc.and social influences includes class, interests, lifestyle, consumption pattern, etc.Choice criteria are the various features and benefits a customer uses when evaluatingproducts. These factors provide the basis for deciding to purchase one brand oranother. Different members of the buying group may use different choice criteria.A child may use style as a criterion when choosing shoes whereas a parent mayuse price. Choice criteria can change over time due to changes in income throughthe family life cycle, change in circumstances or changes in the attitude of anindividual. For instance, as income increases, price may no longer be a choicecriterion but may be replaced by status.

Technical criteria are related to performance of the product and includereliability, durability, comfort and convenience.

Economic criteria concern the cost aspects of purchase and include priceand running costs.


NOTES


Social criteria concern the impact that the purchase makes on the person’sperceived relationships with other people and influence of social norms onthe person. For instance, purchase of a Mercedes may be a statusconsideration. Social norms such as convention and fashion, or acceptanceby the peer group can also be important choice criteria.

Personal criteria concern how the product relates to the individualpsychologically. Self image is a customer’s personal view of himself. Choiceof brands may be influenced by his need to enhance self image. Some brandsare often associated with upwardly mobile people. They act as symbolsand serve as status satisfying products.

Risk reductions can affect choice decisions since some people are riskaverse and choose safe brands.

Risk averse consumers will not buy new brands and will buy only establishedbrands with the image of being a safe choice. Some brands may also berejected because they have been manufactured by companies that haveoffended a customer’s moral code of conduct.

Several choice criteria may be of an emotional nature. Customers do notmake decisions only on the basis of rational decision criteria. Emotionalcriteria may be driven by emotions or moods of individuals.A student joins a college because his father is an alumnus of the college. Acustomer may like a brand because it is associated with a cause which isvery dear to him. A customer may be willing to buy an expensive holidaypackage because he has got the promotion that he desperately wanted. Acustomer may form a favourable image of a brand because he likes itshumourous advertisement or is impressed with its courteous salespeople. Itis important that a company ensures that a customer is always treatedrespectfully and with warmth. In times of product parity, a customer willbuy from a company who has been nice with them. Nicety can be a hugedifferentiator, especially in services, and it does not come easily to mostpeople.

Customers evaluate a product on the choice criteria that are importantto them. It is important that a company understands the choice criteriaof its target market. The company’s designers should ensure that theproduct has higher level of performance on the choice criteria that areimportant to its target market. Similarly, advertising and salespeopleshould highlight the features and benefits which are important to thetarget market.

Choice criteria do undergo changes over time even for the samecustomer. These changes can be due to competitive activities, or due tochanges in the customer’s internal or external factors. For instance, acustomer may want a luxury car as a replacement for his older model

NOTES



either because his income has increased (income is an external factorrelated to the customer)—he seeks reference group conformance bywanting status due to possession of a product (which is his motivation,an internal factor related to the customer)—or because competitors haveoffered more luxurious cars at lower prices making them moreaffordable.

The Buying Situation

Customers spend different amount of time and effort in different purchase decisions.The level of involvement of the customer depends on the type of product, the levelof perceived risk, the consumer spend and the purchase consequences.

(a) Extended problem solving

The customer spends a huge amount of time and effort in the decision-makingprocess. Extended problem solving involves a high degree of information searchand a close examination of alternative solutions using many choice criteria8. It isimportant to make the right choice since cognitive dissonance is very high if thecorrect decision is not made.

Three conditions primarily characterize extended problem solving situation.Alternatives are differentiated and numerous, there is high involvement inthe purchase situation i.e., purchase is personally relevant and important,and all alternatives may possess desirable features that others do not have9.If alternatives are perceived as similar, then less time is required inassessment.

A customer will evaluate alternatives rigorously if the product’spossession affects his self image. A customer has a view of himself,which he regularly reinforces by the choice of products that he buys.Similarly, other people evaluate him by the products that he possesses.Therefore, a customer is very vigilant when he is buying a conspicuousproduct, because social acceptance and appreciation is dependent onhis buying the right product.

A customer’s involvement in a purchase is high if the perceived risk of buyinga wrong product is high. Risk is high when the product is expensive and isbought infrequently. A customer also faces social and psychological risks,especially when he is buying a conspicuous product.

When the product provides pleasure, as is the case with a holiday package,the customer ensures that everything is to his liking, and that nothing shoulddistract him from the pleasure that he is seeking. This is also true when acustomer is planning a celebration.In extended problem solving situation, a customer will not make a decisionuntil he has evaluated all his options. A company should enable customers


NOTES


to evaluate its product by providing them detailed information about itsproducts and those of its competitors. Advertising and sales force can providesuch information and it must be aimed at appropriate motivations of varioustarget segments. It can also enable him to try its product as well as those ofits competitors.

(b) Limited problem solving

The customer has bought and used the product earlier and he recollects hisexperience with the product from his memory. He will buy the product if hisexperience with the product has been good, but he may also make some externalsearch and evaluation of any new features and benefits. Since the customer islikely to buy the product that he has bought earlier, other companies have tomotivate the customer to start the search and evaluation process from the beginning.Marketers can change the attitudes of consumers towards low involvementproducts by adding beliefs or changing their importance. They have to addunexpected features and benefits to move the customer away from buying theproduct that he has been buying. The customer needs to sit up and consider if heis missing something very important by continuing to buy the same product, forinstance, cooking oil doing good to the heart.

(c) Habitual problem solving

The customer buys the same product without even considering the alternatives.He is extremely satisfied with the product, or does not consider the productimportant enough to warrant his spending time in a new search and evaluationprocess. If the incumbent company continues to advertise and be visible, thecustomer will continue to believe that he is making the right choice. The outsidercompany has to advertise profusely, and be seen and heard everywhere. It alsohas to provide lucrative incentives, which may induce the customer to try the newbrand. It is a difficult game, because most of the time, it means beating cult brands.

(d) Household decision-making process

The household is one of the most important social groups that exerts influence onindividual decision making. The extent of these influences depends on the stage ofthe family life cycle as this determines the kind of decisions its members make.The demographic factors of age, marital status and the presence of children in thefamily play a major role in shaping individual and joint purchase behaviour.Marketers and advertisers can use the information on the family life cycle to developstrategies that conform to the unique needs and circumstances of their targetmarkets. As the demographic structures of the society change, the family life cycleitself may need to be modified as new types of family forms appear. As familieschange, marketers get opportunities to develop new products and reposition oldones.

NOTES



The family also acts as one of the most important reference groups forindividual consumers. Discussions about products, brands and choice criteria occuroften among family members. Many products also involve joint decision makingamong the members of a household. The desires, attitudes, incomes, culturalbackground and personalities of family members play a crucial role in the overalloutcome of a particular decision.

Children learn various norms of consumption from family members first,making them the most important primary reference group. The specific culture,subculture and social class that a family belongs to, influences and shapes anindividual’s behaviour as a consumer for life. Different members of the familyplay varying consumer roles depending on the type of decision making that isinvolved. The dynamics of group decision making apply in case of a purchasedecision by a household unit. The differences in the influence of membersusually stems from the type of product to be purchased. For instance, forgroceries, the wife is the predominant influencer and buyer, while for financialproducts, it is the chief male member of the family and for a bike, a teenagekid in the family has a predominant say. However, with changes in the familystructure, such stereotypes are undergoing a change. Role reversals or rolesharing is becoming more common. The role of wives in buying cars, or planninginvestments, and the role of husbands in buying groceries cannot beunderestimated. And kids are becoming more influential even for high-involvement products such as cars, planning vacations, consumer durables,etc., besides becoming independent in taking decisions for products that aremeant for their self-consumption. Therefore, marketers need to give carefulconsideration to the dynamics of the household decision-making process whileassessing the role of each member in this group.

Personal Influences

Various factors influence the decision-making process of a consumer. Some ofthese are internal factors, or personal influences that are individualistic in nature.These factors are not visible, though they influence the consumer to a greatextent. Learning, perception, motivation, attitude, self-concept, etc., are somesuch factors. The processes by which these factors influence consumers have tobe examined and understood by the marketer by conducting appropriate research.The effect of these factors cannot be verbalized by the consumer, as he may notbe able to realize their influence on him. For instance, motivation is one suchfactor about which traditional surveys reveal little, as the consumer is not able totell the exact reasons for opting for a particular choice. Qualitative, exploratoryresearch using alternative methods such as projective techniques, wordcompletion tests are used to ascertain consumer motivations. You have alreadylearnt about these in earlier units.


NOTES


Social Influences

Besides the internal factors, external factors also influence consumer behaviour.These factors are not individualistic and are external to the individual. These factorsinclude culture, subculture, social class, reference group and family influences.They are associated with the groups that the individual belongs to and interactswith. You have already learnt about them in earlier units.

12.2.2 Problem Recognition

The buying process starts when the buyer recognises a problem or need.Problem recognition results when a consumer recognises a difference ofsufficient magnitude between what is perceived as the desired state of affairsand what is the actual state of affairs, enough to arouse and activate the decisionprocess. The ‘actual state’ refers to the way in which a need is already beingmet and the ‘desired state’ is the way a person would like for the need to besatisfied. Consumer information processing and the motivation process arehighly relevant here. Consumers must become aware of the problem or needthrough processing of information arising internally or externally. They thenbecome motivated. Thus, the process of problem recognition means that theconsumer becomes aroused and activated engage in some purposeful purchase-decision activity.

This motivation to resolve a particular problem, however, depends on twofactors-the magnitude of the discrepancy between the desired and actual states,and the importance of the problem. A discrepancy may exist between theconsumer’s actual and desired state, but it may not be likely to be large enough tomotivate him to proceed further in the decision process. So also, consumers facingtime and or budget constraints will attempt to solve only the most significant problemsas they perceive them.

Problem recognition must also result in the problem being sufficientlydefined if the consumer is to engage in meaningful behaviour aimed at solving it.Sufficient problem definition occurs for the consumer to be able to act on it inmany problem recognition situations. Situations may exist, where the consumermay not have a clear definition of the problem, even though problem recognitionhas occurred. These cases of problem recognition and definition may oftencomplex. Illustrating the potential complex nature of problem recognition andthe consumer’s decision process is the fact that consumers often exhibit delays.In an exploratory study (Eric Greenleaf and Donald Lehmann) the reasons orcauses why consumer delay making decisions for major purchases, five causeswere found. They are (i) difficulty of selecting the best brand, (ii) time pressure,(iii) perceived risk of product performance, (iv) uncertainty, and (v) taskavoidance and unpleasantness.

Figure 12.2 presents a view of the problem recognition process and factorsthat influence it.

NOTES



Fig. 12.2 Consumer Problem Recognition Process

Research on problem recognition: A recent stream of research on problemrecognition has viewed the process as being a function of the congruity betweenthe positive or negative valence values of some perceptual stimulus and therespective positivity, negativity values for some evoked referent. For example,a consumer may see a friend‘s new car (perceptual; stimulus) and compare itto his own old model (evoked referent). If the new car is perceived to besignificantly better than his old one, then problem recognition would be expectedto occur.

Another research direction taken has been to view problem recognitionlongitudinally. Instead of focusing on one instance of problem reconition, the effectof repeated occurrence of similar problems is considered. For example, consumersmay have problem recognition triggered in three ways: by the actual state changing,by the desired state changing, or by a combination of both changing. As the consumerexperiences the problem several more times, a ‘style’ of recognising the needbegins to develop.


NOTES


Types of problem recognition: Rather than viewing problem recognition asoccurring in only one way, it is useful to understand that there may be varyingtypes of problem-recognition process. One approach has been to develop aclassification system of situations based on the factors of immediacy of requiredsolution and whether or not the problem was expected. The resulting matrix ofproblem types is shown in Table 12.1 consisting of routine, emergency, planning,and evolving situations.

Table 12.1 Types of problem recognition

Immediacy of SolutionExpectancy of Problem Immediate solution Immediate solution

required not requiredOccurrence of problem expected Routine PlanningOccurrence of problem unexpected mergency Evolving

Immediacy of problem solution is a relevant factor in determining the decisiontime horizon, that is, how soon a problem solution is needed will affect the lengthof decision process and intensity of decision effort. Expectancy of the problemcan affect such facets as the sources of information used in the decision process,for example, as well as the number of alternatives considered.

Routine problems are those in which the difference between actual anddesired states is expected to occur and an immediate solution is required.Emergency problems are those that are unexpected in which immediate solutionsare necessary. Planning problems occur when the problem occurrence is expectedbut an immediate solution is not necessary. Evolving situation occur when theproblem is unexpected but no immediate solution is required.Situations leading to problem recognition: There are a number of situationswhich may cause the occurrence of consumer problem recognition. The mostsignificant reasons are:

(a) Depleted or inadequate stock of goods(b) Discontentment with the stock of goods(c) Changing environmental circumstances(d) Changing financial circumstances(e) Marketing activities

Results of problem recognition: Once the consumer becomes aware of aproblem, two basic outcomes are possible. One result is for the consumer, ineffect, not to pursue any further problem solving behaviour. This may occur if thedifference between the consumer’s perceived, desired, and actual states is notgreat enough to cause him to act to resolve the problem.

The second result that may occur from the problem recognition process isfor the consumer to proceed into further stages of decision making activity byengaging in information search and evaluation.

NOTES



Marketing Implication of Problem Recognition

The problem recognition stage of consumer decision making is significant tomarketers in the sense that the process can be effectively measured and can beused to develop and evaluate marketing strategies.

Measuring problem recognition: It has been found that the best way toassess the problem recognition process is through scaling techniques, whichmeasure purchase intentions. Purchase intentions incorporate the consumersattitudes towards the product and may be viewed as the mental forerunnerof buying behaviour.

Activating problem recognition: Promotion is used as an importantvehicle by marketers to cause problem recognition occur among potentialcustomers. Activities may be focused (i) influencing the consumer’s desiredstate, (ii) influencing consumer’s perceptions of the actual state, or (iii)influencing the timing of problem recognition.

Utilising problem recognition information: Information on buyerintentions may be useful to the marketer in (a) analysing purchase intentioncategories, and (b) analysing conversion of purchase intentions.

Analysing purchase intention categories: By measuring the speed,direction, and size of shifts in buying likelihoods for a product over severalperiods in various market segments, the marketer may discover what trendsare taking place as well as the timing and size of their potential impact onscales.

Analysing conversion of purchase intentions: Significant implicationsmay also be found in the marketing strategy by investigating the relationshipbetween purchasing intentions data allows the marketer to understand thedynamics of marketplace activity. He can obtain a clearer picture of whichbrands are converting predispositions into buying action. This informationcan help him to determine the point at which marketing success or failure isoccurring and to isolate the reasons.

The outcome of problem recognition could be for the consumer to continueinto other stages of decision making or to be restrained by environmentalcircumstances from further purchasing behaviour.

Check Your Progress

1. What would a completely rational decision require?2. Define Consumer Decision-Making Process.3. What is economic criteria in choice criteria?4. How can Marketers can change the attitudes of consumers towards low

involvement products?5. What is actual state and desired state in problem recognition?


NOTES



1. A completely rational decision would require, before purchase, the analysisof the features and characteristics of a product as well as other similarcompeting products.

2. The decision-making process undertaken by consumers regarding potentialmarket transaction before, during, and after buying a product or service iscalled ‘Consumer Decision-Making Process’.

3. Economic criteria concern the cost aspects of purchase and include priceand running costs.

4. Marketers can change the attitudes of consumers towards low involvementproducts by adding beliefs or changing their importance. They have to addunexpected features and benefits to move the customer away from buyingthe product that he has been buying. The customer needs to sit up andconsider if he is missing something very important by continuing to buy thesame product, for instance, cooking oil doing good to the heart.

5. The ‘actual state’ refers to the way in which a need is already being met andthe 'desired state' is the way a person would like for the need to be satisfied.

12.4 SUMMARY

A completely rational decision would require, before purchase, the analysisof the features and characteristics of a product as well as other similarcompeting products. Moreover, this is not possible due to two reasons.First, consumers have limited mental resources; second, they have limitedfree time. Marketers can use these factors to their benefit.

There are two major kinds of mental processing a consumer can make totackle a problem at hand. One is systematic processing, which involves in-depth analysis and scrutiny of every stimulus in the environment. The otheris heuristic processing, where one takes mental short-cuts to arrive at adecision.

There are three ways of analysing consumer buying decisions: Economicmodels, Psychological models and Consumer behaviour models.

There are several factors which influence the buying decision. These can bebroadly categorised as situational, personal, social and other factors. Wheresituational factors include decisions related to choice criteria or buying task,and market offering, personal influences include factor like learning, attitude,perception, etc. and social influences includes class, interests, lifestyle,consumption pattern, etc.

NOTES



Choice criteria are the various features and benefits a customer uses whenevaluating products. These factors provide the basis for deciding to purchaseone brand or another. Different members of the buying group may usedifferent choice criteria.

Customers spend different amount of time and effort in different purchasedecisions. The level of involvement of the customer depends on the type ofproduct, the level of perceived risk, the consumer spend and the purchaseconsequences.

The buying process starts when the buyer recognises a problem or need.Problem recognition results when a consumer recognises a difference ofsufficient magnitude between what is perceived as the desired state of affairsand what is the actual state of affairs, enough to arouse and activate thedecision process.

12.5 KEY WORDS

Consumer Decision-Making: It is the process by which consumersbecome aware of and identify their needs; collect information on how tobest solve these needs; evaluate alternative available options; make apurchasing decision; and evaluate their purchase.

Problem-solving: It is the act of defining a problem; determining the causeof the problem; identifying, prioritizing, and selecting alternatives for asolution; and implementing a solution.



1. What are the two major kinds of mental processing a consumer can maketo tackle a problem?

2. Write a short note on the concept of choice criteria.3. What are the types of problem recognition?


1. Explain the ways of analysing consumer buying decisions.2. Explain the concept of buying situation in detail.3. Discuss the results and marketing implication of problem recognition.


NOTES








NOTES


Purchase and Action

UNIT 13 PURCHASE AND ACTIONStructure

13.0 Introduction13.1 Objectives13.2 Information Search and Evaluation of Alternatives and Selection13.3 Purchase and Post-Purchase Evaluation of Decision13.4 Outlet Selection13.5 Answers to Check Your Progress Questions13.6 Summary13.7 Key Words13.8 Self Assessment Questions and Exercises13.9 Further Readings

13.0 INTRODUCTION

When people realize the need of something the buying decision process starts.They acknowledge that they have a problem and the solution must be devised.At this point, the customer may or may not know what will solve their problembut they want to change their situation. The next phase of the buying decisionprocess begins when the customers start looking for information that will helpthem solve their problem. At this point, usually the customers turn to onlineresearch and conduct searches to find a viable solution. Once the initial informationsearch is complete, customers start evaluating what they explored and learned.They begin to evaluate their options to determine which the best solution fortheir problem is. At this point of purchasing decision process, the customers areready to make the purchase. They have made their decision about which product,service, brand, or solution is the best for them, and they are ready to buy. At thelast step of the five-stage consumer decision-making process, the path to buyingis complete. Now is the time when the customer reflects on whether they madethe right decision. In the previous unit, situation influence and problem recognitionsteps were discussed. This unit deals with the process of a purchase. Let usstudy in detail in the following unit.

13.1 OBJECTIVES

After going through this unit, you will be able to: Understand the process involved while making a purchase Explain the analysis of a product’s alternatives available in the market Discuss the causes of dissonance in the process of purchase State the factors on the basis of which the outlet selection is made Discuss the meaning of e-commerce

Purchase and Action

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13.2 INFORMATION SEARCH AND EVALUATIONOF ALTERNATIVES AND SELECTION

The consumer, after recognizing the need for a product, searches for alternativesthat may fulfil his needs, and evaluates these alternatives on the basis of variouschoice criteria.

The consumer first conducts an internal search. Internal search involvesretrieving relevant information from his memory, information about similarpurchase decisions made earlier by the consumer, or information about theproduct received from personal or non-personal sources that was stored inthe memory for future usage. Such information includes decisions aboutchoice criteria, brands included in the consideration set, information receivedfrom reference groups or advertisements related to the product, etc.

In case the internal search for information is insufficient, the consumer goesin for external search. External sources involve information collection frompersonal sources such as family, friends and non-personal or commercialsources including advertisements, retailers and other media sources.

Third party reports may provide unbiased information to consumers abouta company and its offerings. Retailers and media reports by independentagencies are therefore particularly credible sources of information forconsumers.

Personal experience with the product is often the most important factorwhile evaluating the product. Consumers may seek limited trials of the productbefore buying, or may ask for demonstrations.

Information search aims to create an awareness set, which is an arrangementof brands that may be able solve the problem.

An advertisement may not only excite the search for more unbiasedinformation related to the advertised product but may also induce externalinformation search about rival brands.

Evaluation of Alternatives and Purchase

The following considerations need to be borne in mind before taking purchasedecisions:

The awareness set has to be reduced to a smaller set of brands for seriousconsideration through screening. This smaller set is called the evolved setor the consideration set.

The screening process to narrow down the choice to a few brands mightmake use of a different choice criteria from those used when making thefinal choice. Consumers use various types of rules while arriving at the setof possible brands that can be considered for purchase.

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Purchase and Action Involvement can be explained as the degree of perceived relevance andpersonal importance accompanying a particular purchase decision. In highinvolvement decisions, the consumer carries out extensive evaluations ofthe brands. High involvement purchases typically incur high expenditure orpersonal risks. The consumer spends more time and effort in arriving at the‘right’ decision. The evaluation of choices is more stringent and the consumeruses many choice criteria on which to evaluate various brands.

Low involvement products incur less expenditure and personal risk, andhence, the consumer spends less time and effort in such decisions. In suchpurchases, simple and lesser evaluative criteria are used. Consumers makeuse of simple choice tactics for reducing time and effort in buying the productrather than maximizing the results of the purchase.

In high involvement products, consumers assess the outcomes of thepurchase and others opinion about it. The attributes that are weighed heavilywill influence the decision more strongly.

Low involvement products are characterized by awareness, trial and repeatpurchases. The restricted importance of the product does not assurereasoned evaluation of alternatives. Awareness comes before trial and if thelatter is satisfactory, purchase is repeated. This behaviour tends to turn intoa habit unconsciously or forms certain attitudes that come before purchasebehaviour. Awareness is followed by behaviour that is followed by attitude.Any of the brands of the evoked set can be taken to be acceptable. Decisiondoes not involve the consumer, and he is likely to be satisfied with the productwithout much conscious deliberation about it.

In high involvement situations, marketers should give a good amount ofinformation to the customers because they need such information forevaluating the brands that they are considering. More repetitions ofcommunication may not be needed. Print media allows an elaboratedand repeated scrutiny of information which is helpful when a customeris comparing brands. Communication should focus on how the customersview the influence of important others on the brand choice. Salespeopleshould ensure that the customer understands the importance of attributesof a product and also ensure that he correctly evaluates theirconsequences.

In low involvement purchase, trying to achieve top of the mind awarenessby the means of advertising and positive reinforcement like sales promotionsto gain trial may be more vital than providing information. The customer isconsidered a passive receiver and does not seek information actively.Therefore, advertisements need to be short with a high repetitive value ofthe key points. Television allows passive reception of messages and maybe the best medium for an advertiser to communicate.

Purchase and Action

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13.3 PURCHASE AND POST-PURCHASEEVALUATION OF DECISION

Once the customer has zeroed in on the right choice, he makes a purchase. Theproduct can be purchased from retail stores, online, ordered by telephone orpurchased directly from the company. The purchase process itself involves severalmore decisions. It involves decisions about the place and mode of purchase,payment terms and conditions, delivery of the product, instalment, training forusage of the product, etc. Marketers can study each of these processes to discoversources of competitive advantage. Marketers can either conduct these activitiesthemselves, or they may employ intermediaries to perform these tasks. For instance,the goods may be delivered by the retailer while engineers of the company mayinstall the products and train the customer. In case of high involvement products,the purchase process may itself take a long time. It may stretch from a few days toa few months or longer. The marketer has to take particular care of the customerduring this crucial period in their relationship.

Post purchase concerns that customers may face are called cognitivedissonance. These concerns arise out of the uncertainty of making the correctchoice. This happens because choosing one product means rejecting the attractivefeatures of the alternatives. Dissonance increases with expense of the purchase,difficulty of making decisions (many alternatives, many choice criteria and eachalternative offering benefit not available with others); risks involved in the purchase(functional, psychological or social risk) and when decision is irrevocable shortlyafter purchase. Car buyers will look at ads and brochures of the models and wantreassurance from others who own the same model. Car dealers can build confidencein the buyer by interacting with recent purchasers to reinforce the feasibility oftheir decision and also to confirm the quality after sales service available.

13.4 OUTLET SELECTION

Outlet means a point from where goods are sold or distributed and selectionmeans the action or fact of carefully choosing something as being the best or themost suitable. The outlet selection can be made on the basis of the followingfactors:

Outlet image Advertising Outlet location and size Consumer characteristics Point of purchase displays Price reductions

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Purchase and Action Store layout Store atmosphere Outlet Image: It concerns all the traits related with the store. Advertisers

utilize these measurements to plan retail procedures. First they attempt tocreate a great picture and present the clients with suitable alternatives oftheir needs. Then they combine the two to advertise themselves as a retaillocation. They extend their continuous support and give a great deal ofimportance to it. This way, an outlet image is created in the mind of apurchaser.

Advertising: Retailers use value publicizing to attract customers to the stores.Most of the people visit the stores to purchase the publicized products;however, they wind up purchasing different items. In addition, cost is asignificant factor for buying an item.Customers see the value of the advertisement as decrease in cost. Numerousadvertisers advertise the ordinary cost just as the offered value, demonstratinga markdown.Different variables like item classification, brand, starting value level, customergathering and retail source are considered for value promoting.

Outlet Location and Size: Store location is a significant factor for thecustomers to decide their purchase as it is likely for them to visit the storethat is nearest to the locality. After considering all the factors, it can be saidthat the bigger stores are wanted more than the modest stores. Customerswill prefer a modest store that is near to the place they live for minor things,but for buying things of excessive cost, they will take the difficulty of goingto a bigger store, be it somewhere far from their place of living.

Fig. 13.1 Outlet Selection

Location affects a customer’s purchase decision. Customers like plentifulspace to move around and admire good presentations of the items. Area ofthe store may not be such a huge amount of significance to numerous asmight be different factors like the value, the assortment, store quality andtidiness and the vibe of the store.

Purchase and Action

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Consumer Characteristics: Customer qualities must be examined in lightof the fact that they give an insight of the buyer’s perception. Variouscustomers have various reasons for shopping.

Point of Purchase Displays: These are imperative to persuade thecustomer to settle on a choice. Their effectiveness increases when combinedwith promoting.

Price reductions: Price reductions can be done in the form of limits,coupons, endowments, etc. When brands offer a reduced price to theircustomers, their popularity increases and they move quickly up the ladderin comparison to the contending brands. After getting a reduced price oftheir purchase, the buyers may stock the item in a prominent amount than iswanted. This is known as stockpiling.

Store layout: This is a significant factor in store retailing. Unmistakably theitem shown with great lighting and perceivability, draw in more noteworthyconsideration of purchasers which increases the chances of it being sold.The store format ought not to be tedious, and should be updated with thetime.

Store atmosphere: An amiable environment of a store affects an individualmentally by making him spend more time there and purchase more items.In atmospherics the importance is given to lighting, floor design,introduction installations, colours, sound, dress, conduct of salesrepresentative.

E-commerce

Electronic business or electronic commerce is the purchasing and selling of productsand enterprises, or the communicating of assets or information, over an electronicplatform, essentially the web. These business exchanges happen either as business-to-business, business-to-purchaser, shopper-to-buyer or customer-to-business. Theterms Internet business and e-business are regularly utilized conversely. The term e-tail is additionally at times utilized concerning the value-based cycles for internetshopping. Anytime accessibility, the speed of access, the wide accessibility ofmerchandise and ventures for the buyer, simple openness and global reach, Lowercost, Personalization and item proposals are some of the benefits of e-commerce.

Store Marketing Issue

There are several problems in store marketing or retail marketing which are asfollows:

1. A service cannot be illustrated.2. Usage, production and sale of services take place simultaneously.3. A service cannot be stored.

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Purchase and Action4. These services cannot be protected through any other licences or any patents.5. These services cannot be separated from the service provider.6. These services are inconsistent but not standardized.7. Service providers have appointed few franchisees may face many problems

for service quality.

Dealing with Complaints

The complaints raised by the customers can be authentic or a fallacy. Here are fiveprocedures that will help you handle a client protest in a smooth and expert way asfollows:

Stay quiet Listen well: As the client vents out his annoyance and sees that you are not

responding, he will start to quiet down. The client needs to get into a quietattitude before the person in question can hear anything.

Acknowledge the issue Know the fact Offer a solution and solve the issues

If you settle client objections effectively, you will comprehend their necessitiesin a better way, hold them as faithful clients, and upgrade your business.

Check Your Progress

1. What happens in high involvement decisions?2. What types of decisions are involved in a purchase process?3. Define cognitive dissonance.4. What is stockpiling?5. What is e-commerce?


1. In high involvement decisions, the consumer carries out extensive evaluationsof the brands. High involvement purchases typically incur high expenditureor personal risks.

2. Purchase process involves decisions about the place and mode of purchase,payment terms and conditions, delivery of the product, instalment, trainingfor usage of the product, etc.

Purchase and Action

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3. Post purchase concerns that customers may face are called cognitivedissonance.

4. After getting a reduced price of their purchase, the buyers may stockthe item in a prominent amount than is wanted. This is known asstockpiling.

5. Electronic business or electronic commerce is the purchasing and selling ofproducts and enterprises, or the communicating of assets or information,over an electronic organization, essentially the web

13.6 SUMMARY

The consumer, after recognizing the need for a product, searches foralternatives that may fulfil his needs, and evaluates these alternatives on thebasis of various choice criteria.

Involvement can be explained as the degree of perceived relevance andpersonal importance accompanying a particular purchase decision. In highinvolvement decisions, the consumer carries out extensive evaluations ofthe brands. High involvement purchases typically incur high expenditure orpersonal risks.

Low involvement products incur less expenditure and personal risk, andhence, the consumer spends less time and effort in such decisions. In suchpurchases, simple and lesser evaluative criteria are used.

Once the customer has zeroed in on the right choice, he makes a purchase.The product can be purchased from retail stores, online, ordered by telephoneor purchased directly from the company. The purchase process itself involvesseveral more decisions. It involves decisions about the place and mode ofpurchase, payment terms and conditions, delivery of the product, instalment,training for usage of the product, etc.

Outlet means a point from where goods are sold or distributed and selectionmeans the action or fact of carefully choosing something as being the bestor the most suitable. The outlet selection can be made on the basis of thefollowing factors:

o Outlet imageo Advertisingo Outlet location and sizeo Consumer characteristicso Point of purchase displayso Price reductions

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Purchase and Actiono Store layouto Store atmosphere

Location affects a customer’s purchase decision. Customers like plentifulspace to move around and admire good presentations of the items. Area ofthe store may not be such a huge amount of significance to numerous asmight be different factors like the value, the assortment, store quality andtidiness and the vibe of the store.

Electronic business or electronic commerce is the purchasing and selling ofproducts and enterprises, or the communicating of assets or information,over an electronic platform, essentially the web. These business exchangeshappen either as business-to-business, business-to-purchaser, shopper-to-buyer or customer-to-business.

13.7 KEY WORDS

Involvement: It is the fact or condition of being involved with orparticipating in something.

Choice criteria: It refers to the specific attributes or consequences thatare used by consumers to evaluate and choose from a set of alternatives.

E-commerce: It is the commercial transactions conducted electronicallyon the Internet.



1. What is e-commerce?2. State the store marketing issue.


1. Explain low involvement and high involvement purchases.2. Illustrate the factors on the basis of which the outlet selection is made.




Purchase and Action

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Organizational Buyer

UNIT 14 ORGANIZATIONAL BUYERStructure

14.0 Introduction14.1 Objectives14.2 Meaning and Nature of Organizational Buyer

14.2.1 Market Structure and Pattern of Demand14.2.2 Organizational Buyer vs Final Consumers14.2.3 Characteristics of Organizational Buyers

14.3 Decision Approach and Purchase Pattern14.4 Organizational Buyer Decision Process14.5 Answers to Check Your Progress Questions14.6 Summary14.7 Key Words14.8 Self Assessment Questions and Exercises14.9 Further Readings

14.0 INTRODUCTION

A considerable share of the market for goods and services may be attributed toorganizational buyers besides individual buyers. Generally, organizational buyerstend to be more sophisticated than ordinary consumers. They make buying decisionsfor the companies they work for. Since their job involves buying for a company oran industry, they face big risks like going with a new, possibly better (lower priceor higher quality) supplier whose product may later turn out to be problematic. Thus,the fear of running this kind of risk is greater than the potential rewards for gettinga better deal. Organizational buyers include wholesalers, retailers, producers, etc.This unit deals with the nature, decision approach and purchase pattern oforganization buying. Let us study in detail about the organizational buying in thefollowing unit.

14.1 OBJECTIVES

After going through this unit, you will be able to: Understand the meaning and nature of organizational buyer Explain the approach taken to decide a purchase Differentiate between organizational buyer and ordinary consumer Discuss the standard process of organizational buyer’s decision making


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14.2 MEANING AND NATURE OFORGANIZATIONAL BUYER

Organisation buyers are those who buy goods and services for the purposes offurther production, release and redistribution. The industrial buyers buy goodsand services for the purpose of increasing sales, cutting costs and supplying theirproducts to the customers at the lower costs consistent with quality.Meaning and Definition

Fredrick E Webster and Yoram wind have defined organisational buying as “thedecision making process by which formal organisations establish the need forpurchased products and services, and identity, evaluate and choose among thealternative brands and suppliers.”

Industrial consumer may be defined as “business or institutional organisationsthat buy products services either to use in making other goods and services or touse in their own business.” Today, the term organisational customer refers to notonly the business firms but also includes the government, retail institutions, otherservice institutions like universities, colleges, financial firms like banks and socialorganisations like Red Cross, Family Planning Foundation, etc. Thus, the scopefor marketing to institutions has got significantly enlarged and hence offers a challengeto the marketer. For example the customers of MRF company include, besidesthe above mentioned ones, Government and its agencies which need auto tyresfor their vehicles. Defence is an important government department needing autotyres. Municipal corporations, too, need them for their vehicles. And state transportundertakings (STUs) need them as well. So for MRF the challenge is not only toremain a leader in auto manufacturers’ purchases, and in the replacement marketfor consumer purchases, but also in the government and its several agencies likeSTUs and local bodies like municipalities.Types of Industrial Consumers

According to Canfield there are three types of industrial consumers, which are asfollows:

(i) Manufacturers, who purchase goods for turning them in to finished goodssuch as cotton, pig iron or sheets, and all types of raw materials.

(ii) Manufacturers and service organisations which buy goods forconsumption in the operation of their business, such as lighting equipmentsand furniture and fixtures, fitting in a cinema hall.

(iii) Industrial distributors who buy for resale to industrial consumers. Industrialconsumers are concentrated in industrial areas where a large number ofindustries are developed and located. Typical industrial buyers are inextractive, processing, construction and transportation industries, public

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Organizational Buyerutilities, services and distributive industries, governmental institutions,commercial institutions, specialised service industries (hotels, restaurants,theatres, laundries, dry cleaners, tailoring and barber shops, etc).The industrial market (also referred to as the producer /manufacturer /

business market) consists of all the individuals or organisations who acquire goodsand services that enter into the production of the other products or services thatare sold, rented or supplied to others.

The major types of industries making up the industrial market are (a)Transportation, distribution and storage (b) Banking finance and insurance (c)Agriculture, forestry and fisheries.

Organisation buying is in one way similar to consumer buying since it is not“organisations” making the buying decisions but people within those organisations.But there are significant differences that must be understood by marketers in orderto succeed in the organisational market.Purpose of Organisational BuyingOrganisational buyers make purchase decisions in order to satisfy their goals, asdo the final consumers. But the goals differ. Organisations have the goals ofproducing a good, providing a service, or reselling an item, and therefore, buyproducts and services that will allow them to effectively engage in these activities.Buyers may be for-profit operations or not-for-profit, product or service-oriented,governmental or private. In all cases, organisational buying takes places in orderto produce, provide a service, or engage in resale. Organisational buying, therefore,is the decision making processes by which organisations establish the need forpurchased products and services, and identify, evaluate, and choose amongalternative brands and suppliers.

Organisational buying activities have evolved significantly. Shifting from veryunsophisticated operations in which clerks with little expertise or specialisation inpurchasing did most of the buying, today even companies with as few as twentyemployees have a purchase. In this current complicated environment the purchasingspecialist attempts to satisfy the organisation’s product or service needs in a complexprocess requiring balancing of relations with suppliers, colleagues, superiors,product specifications, trade regulations, his or her personal reputation, price andother factors.

Classification of Industrial Buyers

Industrial buyers can be classified into seven types:1. Loyal buyer: This buyer remains loyal to a source year after year.2. Opportunistic buyer: This buyer selects those vendors who will further

his or her long-term interests and drive a hard bargain.3. Best-deal buyer: This buyer selects the best deal available at the time.


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4. Creative buyer: This buyer tells the seller what he or she wants in the wayof a product, services and prices.

5. Advertising buyer: This buyer attempts to obtain advertising money as apart of every deal.

6. The defrauder: This buyer constantly negotiates extra concessions in price.7. Nuts-and-bolts buyer: This buyer selects the merchandise offering the

best value.Organisational Buyers versus Final ConsumerThe same consumer behaviour concepts cannot be simply applied to individualsengaging in purchasing behaviour as part of their job in the organisation becausethe context is different. There are several ways in which organisational marketsand their buying behaviour differ from consumer markets and buying behaviour.The major variations are in market structure and demand, buyer characteristics,and decision processes, and buying patterns.

14.2.1 Market Structure and Pattern of Demand

The organisational marketer should recognise that several factors related to marketstructure and demands distinguish these buyers:

1. Geographical concentration: Buyers are more concentrated than inconsumer market. This situation is compounded when concentration ofspecific industries is considered. For example, textiles are clusteredpredominantly at Ahmedabad and Surat.

2. Fewer, larger buyers: Buyers are also concentrated by size in theorganisational market. Organisational marketers look for a few goodcustomers.

3. Vertical or horizontal markets: Organisational buyer marketers may beeither vertical or horizontal. In a vertical market the product or servicewould be sold to virtually all organisations in perhaps one or two industries.Certain drilling bits are intended only for use in the oil exploration industry.Certain knitting materials are used in hosiery industry only. Downturns inthe target industry may hit vertical marketers extremely hard. Horizontalmarkets are those which are very broad, in which the product or service issold to a wide spectrum of industries. Computer services, office supplies,etc., are not radically affected by shifts in any one industry, as effort will befocused on other industries not affected by changing technology or tastes.

4. Derived demand: Organisational demand is derived from consumerdemand. If the demand from consumers slumps, the suppliers face reduceddemand for their products.

5. Inelastic demand: Total industry demand for industrial goods is relativelyunaffected by changes in price in the consumer markets. If all tyre producers

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Organizational Buyerwere to raise their tyre prices by ̀ 50/- to auto manufactures this wouldhave little effect on demand. Auto manufacturers would continue to purchaseroughly the same amount, since tyres represent such a small price in theoverall cost of the finished automobile, and a fractional increase in automobileprice will have no perceptible effect on the consumer. Similarly, an overallincrease in the price of computer chips will have little overall effect on theprice of the finished computer and, therefore, little, if any, impact on totalcomputer demand. While this situation is true for industry demand, anindividual firm’s demand may be strongly affected by a price change.

6. Fluctuating demand: Organisational demand is characterised by muchgreater fluctuation than that of consumer markets. Generally, organisationalbuying is closely related to the economic cycle. When demand for consumergoods is up, industrial goods are also up; and organisational buyers maybuild large inventories of raw materials and component parts and may totheir plant and factories, office equipment and other items. When the economyslows down or reverses, manufacturers, wholesalers, and retailers may useup existing inventories and postpone purchases of supplies, equipment, andso forth.

14.2.2 Organizational Buyer vs Final Consumers

There are several important organisational buyer characteristics typically citedthat differentiate them from final consumers.

1. Group involvement: As products purchased by organisational buyers areoften costly and complex, a group of individuals may be involved in thedecision.

2. Technical knowledge: Professional buyers, generally quite knowledgeableabout the products or services being bought, make the purchase decisionor may be directed by other technically competent individuals (such asengineers) to the appropriate purchase decision based on a group decision.These buyers are known as purchasing agents in industrial, governmental,and institutional organisations.

3. Rational motivations: Organisational buyers are often strongly directedby rational motivations. Such factors are generally economically based andcan be translated into rupees so that costs and benefits may be carefullyweighed. In addition, the buyers are also influenced by emotional motivations,and these are often difficult for a vendor to assess. Many personal andindividual factors may play a significant role in purchasing behaviour, butthey are difficult to calculate.

14.2.3 Characteristics of Organizational Buyers

In this section, we will go through the characteristics of organizational buyers basedon some predefined factors.


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Nature and Size of Customers

With the number of customers in business markets being small, 80 per cent of theoutput is sold to 20 per cent of customers whose number may be fewer than adozen. In such a situation, every single customer is of paramount importance.Because order sizes are large, it becomes economical to sell directly frommanufacturers to customers, dispensing with the services of middlemen. In view ofthe importance of large customers, it is sensible to invest in close, long termrelationships with them. A dedicated sales team is needed for servicing largeaccounts.

Complexity of Buying

In business purchases that involve heavy investment of money and products thatare new to the company, there are many people operating at different places.While deciding, for example, which machine should be bought, several topfunctionaries of the company, such as marketing director, production managers,purchasing managers and even the Chief Executive Officer (CEO) may be involvedin one way or the other. The task of the sales department is to influence the maximumnumber of customers. It may involve multi-level selling by a sales team instead ofan individual salesperson. The sales team should include people who have extensivetechnical knowledge of the product to be sold. The CEO of the seller companymay also form a part of the sales team in case of high priced products (e.g.,machinery).

Economic and Technical Choice Criteria

The economic and technical criteria determine business buying since buyers needto justify their purchases to other members of the organization. Priorities for differentdepartments of the organization are different. Operations people, for example,would be interested in knowing whether the output from the machine would belarge enough to meet their production targets. Similarly, the quality controldepartment would be interested in knowing whether the new machinery wouldproduce goods of adequate quality. Thus, the buying function is formalized byestablishing a purchasing department, which is guided by economic criteria, suchas life cycle cost and value-in-use analysis, rather than emotional choice criteria.

Risks

The contract being agreed upon before the product is often a main feature ofindustrial markets. Suppliers may be selected and given long-term contracts forthe components of the products which are still at the development stage. Theseller is expected to contribute to the designing of the particular component and, insome cases, the entire designing of the component may be left to him. Mahindraand Mahindra, for example, while designing its multi-utility vehicle Scorpio for theIndian market, involved suppliers in the design phase and awarded them long-

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Organizational Buyerterm contracts. As the products are technical in nature, the seller may faceunforeseen problems once the work starts. The final product design anddevelopment may take longer than planned, and the supplier may have committedresources in terms of buying equipments and hiring relevant people. If the time tomarket increases inordinately, the chances of the new product failing uponintroduction is higher. And, if this happens, the suppliers’ resource commitment forthe component may be wasted. More and more buyers are expecting their suppliersto the share the risks involved in the development of new products for the long-term supply contracts with them.

Buying to Specific Requirements

Business buyers draw a product specification and ask suppliers to make theirproducts according to that specification. In consumer markets, the product isdeveloped to meet a need of a market segment, but beyond that, meeting individualneeds would prove uneconomical. Customized products make a long-termsupplier–buyer relationship imperative. For instance, if the seller is selling heavyequipment customized for the buyer, and if the buyer refuses to buy equipment forsome reason (for instance, shifts in consumer preferences for the goods sold bythe buyer, rendering the equipment being bought redundant, etc.), the seller maynot be able to get another buyer for it. In another instance, a seller may havecommitted resources for supplying components in bulk to a buyer. If the buyerswitches suppliers, or no longer requires components, the committed resources ofthe seller go waste. Therefore, in the business buying process, trust is a vital elementbetween the seller and the buyer. Else, problems such as reluctance of seller tocommit resources, payment issues, etc., would continually crop up between thetwo parties. If trust is difficult to build, contractual obligations must be tight.

Nonetheless, business buyers understand the importance of quality and therole it plays in their performance and rating in the marketplace. They know thatonly if the quality of their products and services is good, they will be able to dowell. Sellers can provide fine quality goods and services only when they get sufficientprofits that they can turn over back into their business to enhance their capability.Thus, buyers are facilitating sellers to have respectable profit margins. Sellers areaware of the fact that their ability to sell to the buyers depends only on the survivalof the buyers. They do not want to harm their buyers by selling them low-gradeproducts at lofty prices. They wish for their buyers to do well so that they cancontinue to supply them with their ware. It is very clear among business buyersand sellers that they rely on each other and are supporting each other to maketheir operations better.

Reciprocal Buying

In some situations, buyers may demand that sellers buy some of their products inreturn for securing the order. The chances of reciprocal buying increase when thetwo partners have diversified businesses. An automobile manufacturer, for example,


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may insist that the computer manufacturer from whom they plan to buy theircomputers should buy its cars for their employees.

Derived Demand

The demand for business goods is determined to a great extent by the demand forconsumer goods. Thus, suppliers should keep tabs on the consumer trends as wellas their buying habits and business customers. The buyer might give completecharge of a component to a supplier. In such a scenario, the buyer goes down oninternal capability and market awareness about that specific element. In such asituation, the supplier should feel accountable for making in the component betterand keeping track of fluctuating consumer needs. The component may be so vitalin the design of the final creation that the quality of the component may be thedistinguishing aspect. In such circumstances, the buyer’s dependency on the sellerincreases to provide aggressive benefits for his product.

In recent years, the demand for some industrial goods and services hasbecome more volatile than that for consumer goods and services. This means thatif the demand for the consumer good goes up by, say ten per cent, the demand forequipment and material used in making it will go up by much more than ten percent. In the reverse case, if the demand for the consumer good goes down by sayten per cent, the demand for equipment and material used in making it will godown by much more than ten per cent. This implies that during the period ofeconomic growth, suppliers of equipments and materials should be willing to spreadout their business as there would be enormous stress on them to supply more andmore volumes. As capacity growth is time-consuming, companies would be wellcounselled to pursue signals of movements in consumer markets before time.However, the period of economic recession would witness a drastic fall in thedemand for equipment and material and companies may want resort to extrememeasures like closing down the unit and retrench their manpower. These types oftactics are likely to render a company inoperative for a long time to come.

Negotiation

Negotiation has become important in view of the existence of powerful buyersand sellers and the size and complexity of business buying. For complex andcustomized equipments, there is lot of dialogue between the buyer and the sellerabout the actual requirements and specifications. The seller will need to understandthe exact requirements and this may require plant visits and discussions with thepeople of various functional areas. The seller will proceed to make the equipmentonly when the specifications have been agreed upon by both parties. Price alsohas to be negotiated. Since standard equipment is rarely being sold, price dependson the features demanded by the buyer, materials used in making the equipmentand technological sophistication of the equipment. Another point of negotiationwould be the date of delivery of the equipment. The buyer would like theequipment to be delivered to match his business cycle. If this is in the immediate

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Organizational Buyerfuture, the seller would face problems in delivering the equipment. The sellerand the buyer would have to agree upon a delivery date that enables the latter tocatch his business cycle and that does not increase the cost for the seller due toexpediting the order.

For standard equipment and materials, buyers have the power to demandprice concessions. The supplier’s list price may be considered the starting pointfor negotiations and the final price is greatly influenced by the negotiating skill ofthe seller. The buyer may be in negotiation with many sellers simultaneously to getthe best deal for himself. Sometimes the buyer may encourage overt competitionamong sellers to bring down the price. The buyer may also require sellers tosubmit bids and samples of the item. The buyer may not necessarily buy the lowestpriced item, but this process gives him an idea about the price range and theavailable quality level. He can choose to negotiate within this available price andquality range if they are acceptable to him or he may start looking for a new set ofsuppliers.

Check Your Progress

1. Who are organization buyers?2. Name the major types of industries making up the industrial market.

14.3 DECISION APPROACH AND PURCHASEPATTERN

Organisational buying patterns are characterised by a number of differences fromfinal consumers in their decision process and purchases patterns.

1. Formality: Much organisational buyer behaviour is typified by greaterformality than that of final consumers. Often proposals, quotation requests,and purchase contracts are involved which lend to the formality.

2. Complexity: This is a prime cause of the formality necessary in purchasing.Because organisational buyer behaviour is so much more complicatedthan consumer behaviour, products and services are more technicallycomplex, and the financial risks are greater; generally decision makingrequires the conscious consideration of the large number of factors involvedin the decision.

3. Lengthy negotiation: Much organisational buying requires more extensivenegotiation over a longer time period than typically occurs among finalconsumers. Some of the reasons for this situation are: (a) the size of theorder is large and the purchase price is very important, (b) a large numberof people are involved in the decision and (c) the product is complex andspecifications must be carefully agreed to.


NOTES


4. Multiple suppliers: Organisational buyers hesitate to limit their buying ofan item to a single source because their supply could be jeopardised byunforeseen circumstances such as strikes, fires, etc.

5. Large orders: The typical organisational purchase is much larger than thatmade by final consumers.

6. Infrequent purchase: Very large scale and costly items would be onlyinfrequently purchased by organisations. But even smaller, less expensiveproducts may be bought on a contract basis, which reviews only periodically.The organisational marketer must, therefore, be vigilant about sellingopportunities because they may arise only infrequently.

7. Direct buying: Although marketing directly from product to final consumeris growing, such a pattern has long been quite common in the organisationalmarket. Because of the order size, product complexity and bulk, technicalassistance prior to and after the sale, and geographic proximity of customers,a direct relationship between producers and buyers has been widely adoptedfor many organisational purchasing situations.

8. Reciprocity: Reciprocity occurs when two organisations agree to purchasefrom each other, and is found more frequently in industries where productsare homogeneous with little price sensitivity. For example, an auto companymay buy steel from one supplier and that supplier buys trucks from the autocompany.

9. Importance of service: More than the final consumers, organisational buyersrequire service because it has such a direct bearing on their costs, sales,and profits. Companies known for their exceptional service tend to be theones who excel in an industry.

10. Direct Purchasing: Industrial buyers often buy directly from producersrather than through middlemen, especially those items that are technicallycomplex and/or expensive.

11. Leasing: Many industrial buyers lease their equipment instead of buying it.This happens with computers, shoe machinery, packaging equipment, heavy-construction equipment, delivery trucks, machine tools, and companyautomobiles. These lessee gains a number of advantages: conserving capital,getting the seller’s latest products, receiving better service, and gaining sometax advantages. The lesseer often ends up with a larger net income and thechance to sell to customer who could not afford outright purchase.

Check Your Progress

3. Why does organisational buying require more extensive negotiation?4. What is reciprocity?

NOTES


Organizational Buyer14.4 ORGANIZATIONAL BUYER DECISION

PROCESS

In most buying situations, a company will follow the process given in fig 14.1,sometimes unconsciously.

Recognition of the problem or need

Determination of specification and quantity of needed item

Search for and qualification of potential sources

Acquisition and analysis of proposals

Evaluation of proposals and selection of suppliers

Selection of order routine

Performance feedback and evaluation

Fig. 14.1 Buyer Decision Process

The supplier has the chance to affect the buyer at all these stages.The buyer routinely reorders (stationery) from an existing supplier. If any

decision is complex and the item to be bought is more expensive, chances are highthat the buyer may pass over each stage mentioned above and the completion ofthe process will need more time.

(i) Recognition of a Problem or Need

One can recognize requirements and concerns through internal as well asexternal factors. The internal factor includes the realization of not having enoughcapacity, resulting in decision to purchase equipment. This realization leads toactive behaviours, such as sending a requisition for the equipment. There maybe a few issues that have been acknowledged internally but have not beenaddressed due to more pressing problems. When a salesperson discovers


NOTES


that a department or an individual requires equipment but is not pressing withthe purchase, the salesperson may offer some incentives or at least send him aproposal. There are some budding issues that may not come to anyone’s noticeinternally and emerge as problems only due to external factors. Productionmanagers, for example, may be content with the existing production processas long as they have not explored or come across other methods that may bemore efficient.

But the company may not be prompted to act as the product may still beselling. These different problems have significant connotations for salespersons ofsuppliers. The passive condition of the buyer means that there exists a chance fora salesperson, after identifying the case, to emphasize the problem by assiduousanalysis of cost inefficiencies besides other related aspects, so that the problem isconsidered as more serious one, needing a solution.

(ii) Determination of Specification and Quantity of Needed Items

The DMU draws up description of what is required. If marketers are able toinfluence the specifications, it would give their company an advantage at laterstages of the process. By persuading the buying company to specify the featuresthat only their product possesses, the sale may be virtually closed at this stage.

(iii) Search for and Qualification of Potential Sources

If the item to be sold is cheaper and less important and the buyer possesses moreinformation about it, fewer searches would take place. The purchase departmentkeeps information about potential suppliers. It is important that suppliers are intouch with the purchase department. A supplier should be sending his brochuresto the companies, so that when a requirement comes for its product, the companiescan contact the supplier.

(iv) Acquisition and Analysis of Proposals

Companies are chosen to supply the product on the basis of their technical expertiseand general reputation. Their proposals are called for, and analysis of these proposalsis undertaken.

(v) Evaluation of Proposals and Selection of Suppliers

Each proposal is evaluated in the light of choice criteria deemed to be important toeach DMU member. Different members may use different criteria while judgingthe proposals. The main task of the marketer at this point is to identify the membersof the DMU and influence them.

(vi) Selection of an Order Routine

Details of payment and delivery are important. This is conducted by the purchasingdepartment.

NOTES


Organizational Buyer(vii) Performance Feedback and Evaluation

The user department gives the feedback about the product. The supplier hasto work with the user department to ensure that the product works to thesatisfaction of the user. The feedback of the user department is important forthe supplier because a good feedback will enable him to procure orders fromthe company in future. Since a piece of equipment remains in use for a longtime with the buyer, the equipment which works well is a live advertisementfor the supplier. A supplier can remind the buyer of the good equipment thathe has supplied when he is seeking other orders from the company. Conversely,poor equipment will remind the buyer of the wrong purchase that he madefrom the supplier and may show reluctance to do business with him in future.When a buyer is convinced that he had made a wrong purchase from a supplier,the supplier should try to retrieve the situation for the buyer. Buying back theequipment or supplying new equipment should not be ruled out because it isvery unlikely that a buyer will purchase anything from a supplier due to whoseequipment he is suffering.

Marketing may affect a sale through influencing need recognition, throughthe design of product specification and by clearly presenting the advantage of theproduct over competition in terms which are relevant to the DMU members. Byearly involvement, a company can benefit through the process of creepingcommitment which leads the buying organization to become increasingly committedto one supplier through its involvement in the design process and the technicalassistance it provides.

Check Your Progress

5. How does marketing affect a sale?6. How are the specification and quantity of needed items determined?


1. Organisation buyers are those who buy goods and services for the purposesof further production, release and redistribution.

2. The major types of industries making up the industrial market are (a)Transportation, distribution and storage (b) Banking finance and insurance(c) Agriculture, forestry and fisheries.

3. Organisational buying requires more extensive negotiation because (a) thesize of the order is large and the purchase price is very important, (b) a


NOTES


large number of people are involved in the decision and (c) the product iscomplex and specifications must be carefully agreed to.

4. Reciprocity is when two organisations agree to purchase from each other,and is found more frequently in industries where products are homogeneouswith little price sensitivity.

5. Marketing may affect a sale through influencing need recognition, throughthe design of product specification and by clearly presenting the advantageof the product over competition in terms which are relevant to the DMUmembers.

6. The DMU draws up description of what is required. If marketers are ableto influence the specifications, it would give their company an advantage atlater stages of the process. By persuading the buying company to specifythe features that only their product possesses, the sale may be virtuallyclosed at this stage.

14.6 SUMMARY

The industrial buyers buy goods and services for the purpose of increasingsales, cutting costs and supplying their products to the customers at thelower costs consistent with quality.

Fredrick E Webster and Yoram wind have defined organisational buying as“the decision making process by which formal organisations establish theneed for purchased products and services, and identity, evaluate and chooseamong the alternative brands and suppliers.”

Today, the term organisational customer refers to not only the business firmsbut also includes the government, retail institutions, other service institutionslike universities, colleges, financial firms like banks and social organisationslike Red Cross, Family Planning Foundation, etc.

Organisational buyers make purchase decisions in order to satisfy their goals,as do the final consumers. But the goals differ. Organisations have the goalsof producing a good, providing a service, or reselling an item, and therefore,buy products and services that will allow them to effectively engage in theseactivities.

Organisational buyers are often strongly directed by rational motivations.Such factors are generally economically based and can be translated intorupees so that costs and benefits may be carefully weighed.

Business buyers draw a product specification and ask suppliers to maketheir products according to that specification. In consumer markets, theproduct is developed to meet a need of a market segment, but beyond that,

NOTES


Organizational Buyermeeting individual needs would prove uneconomical. Customized productsmake a long-term supplier–buyer relationship imperative.

The demand for business goods is determined to a great extent by thedemand for consumer goods. Thus, suppliers should keep tabs on theconsumer trends as well as their buying habits and business customers.

Much organisational buying requires more extensive negotiation over alonger time period than typically occurs among final consumers. Some ofthe reasons for this situation are: (a) the size of the order is large and thepurchase price is very important, (b) a large number of people are involvedin the decision and (c) the product is complex and specifications must becarefully agreed to.

Many industrial buyers lease their equipment instead of buying it. Thishappens with computers, shoe machinery, packaging equipment, heavy-construction equipment, delivery trucks, machine tools, and companyautomobiles. These lessee gains a number of advantages: conserving capital,getting the seller’s latest products, receiving better service, and gaining sometax advantages.

The user department gives the feedback about the product. The supplierhas to work with the user department to ensure that the product works tothe satisfaction of the user. The feedback of the user department is importantfor the supplier because a good feedback will enable him to procure ordersfrom the company in future.

14.7 KEY WORDS

Organizational buyers: The term refers to the people who make buyingdecisions for their companies for a living and are more sophisticated thanordinary consumers.

Industrial consumer: It refers to the person who purchases products orservices to use in the production of other products.

DMU: It is the Decision Making Unit which consists of team of individualswho participate in a buyer decision process.



1. State the types of industrial consumers.2. Classify the types of industrial buyers.


NOTES


3. What are important characteristics of organisational buyers that differentiatethem from final consumers?


1. What is the purpose of organizational buying? Explain.2. Describe the factors related to market structure and demands that distinguish

organizational buyers from final consumers.







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