Course Components

1. MID EXAM - 20 marks ( Unit 1 & 2)

2. CASE STUDY - 20 marks (the concerned faculty can

decide on how many cases to be assessed in the class
, but ensure that the total marks allotted are 20 )

[Link] ACTIVITY ( Presentations/ project

report / Assignment ) the concerned faculty can decide
on the type of assessment to be adopted but ensure
that the total marks allotted are 20 )
1
Case Study

 Behavioural Drivers of Brand equity: Head & Shoulder in

India, IMB645-PDF-ENG [Link]
 HBR Case: Kobe Influencer Marketing - Building Brand Awareness via Social
Media [Link]
 Cavin Kare's Indica Easy: Launching Shampoo Hair
ColourW26292-PDF-ENG
[Link]
 De Beers Group: Marketing Diamonds to MillennialsW17668-
PDF-ENG [Link]
 Fret and Regret: A Consumer Decision-Making
DilemmaW12016-PDF-ENG
[Link]
 Flipkart: Grappling with Product ReturnsW18425-PDF-ENG
[Link]
 Nestlé KITKAT in Japan (A): Sparking a Cultural
RevolutionW17424-PDF-ENG
2
[Link]
 CONSUMER
BEHAVIOR
UNIT 1

Introduction to Consumer Behavior

Meaning and definition of
CB
 Consumer behaviour is the study of
individuals, groups, or organizations and
the processes they use to select, secure,
use, and dispose of products, services,
experiences, or ideas to satisfy needs
and the impacts that these processes
have on the consumer and society
 According to Engel, Blackwell, and
Mansard, ‘consumer behaviour is the
actions and decision processes of people
who purchase goods and services for
personal consumption’.
 According to Louden and Bitta,
‘consumer behaviour is the decision
process and physical activity, which
individuals engage in when evaluating,
acquiring, using or disposing of goods
and services’.
Consumer behavior is the process whereby individuals decide what, when,
where, how and from whom to purchase goods and services (Walters and
Paul).
What product to buy- A book or a shirt or a movie ticket or a soap
Which brand to buy- Lux, Liril, Hamam, Rexona or OK toilet shop
Where to buy- Super Bazaar, nearby corner shop, Chemist
How to buy- cash, credit or EMI
Types of Buyer (consumer)

Friendly/co-operative buyer. Price or quality conscious buyer.

Timid/reserved/shy buyer. Impulsive buyer.
Undecided buyer. Bargain buyer.
Suspicious buyer.
6
Scope of Consumer Behavior

 The scope of consumer behaviour includes:

• Pre-Purchase Behavior: How consumers
identify needs, search for information, and
evaluate alternatives before making a purchase.
• Purchase Behavior: The decision-making
process and factors influencing the final choice of
a product or service.
• Post-Purchase Behavior: How consumers use
and evaluate products, including satisfaction,
brand loyalty, and potential for repeat purchases.
• Consumer Decision-Making Models: Various
models and frameworks that outline how
7
consumers make decisions, such as the
Importance of Consumer Behaviour

 Understanding consumer behaviour is important for several

reasons:
• Informed Decision-Making: Helps businesses make data-
driven decisions regarding product development,
marketing, and sales strategies.
• Customer Satisfaction: Enables businesses to meet
customer needs more effectively, leading to higher
satisfaction and loyalty.
• Competitive Advantage: Provides insights into consumer
preferences and trends, allowing businesses to stay ahead
of competitors.
• Efficient Resource Allocation: Guides marketing efforts
and budgets more effectively by targeting the right
audience.
8
• Product Innovation: Drives innovation by identifying
Consumer behaviour is product-person-
situation specific

9
Purchase Decision Process
 Problem recognition
 Information search
 Alternative evaluation
 Purchase decision
 Post-purchase behavior

10
Consumer Decision Making Process- The
Process
 Need Recognition
 The realization that there is a difference
between actual and desired states.
 The higher the gap, the stronger the
need ( or bigger the problem)
 Active vs Inactive Problems
 Those that require immediate solution
and those that do not require immediate
solution.
11
Problem Recognition & Marketing
Strategy
 Identify existing consumer problem and find
solutions for these
 Lower the actual
 Increase the desired state
 Increase the importance of the gap between
actual and desired states.
 Convert inactive problems to active
problems
 Convert problems into ones requiring an
immediate solution
12
Pre-purchase process

 Types of information sources

 Personal- Friends & family, Co-workers, Sales
people Stores
 Impersonal: Newspaper & magazine, Consumer
reports, website, advertisement
 Types of Information sought
 Brands or alternative available
 Evaluation criteria to be used
 Ratings of brands on evaluating criteria
 Factors affecting extent of information
search
13
Factors affecting extent of information
search
 Product factors: higher search when
 When it is long lasting or infrequently
used product
 There are frequent change in product
styling
 Large volume is purchased
 The price is high
 There are many alternative brands
 There is much variation in the features
14
Factors affecting extent of information
search
 Situational factors: Higher search when
 Experience is lower
 Previous experience was unsatisfactory

 Social Acceptability : Higher search when

 Purchase is a gift
 Product is socially visible in use.

15
Situational Influences

 Five situational influences have impact

on the purchase decision process
 The purchase task
 Social surroundings
 Physical surroundings
 Temporal effects
 Antecedent states

16
Situational influences

 The purchase task is the reason for engaging in

the decision.
 The search for information and evaluation may
differ on whether the purchase is a gift, which
often involves social visibility, or for the buyers
own use.
 Social surroundings, including other people
present when a purchase decision is made, may
also effect what is purchased.
 Consumers accompanied by children buy about 40
percent more items than consumers buying
themselves
17
Situational influences
 Physical surroundings such as décor,
music, and crowding in retail stores may
alter how purchase decision is made.
 Temporal effects such as time of day or
the amount of time available will
influence where consumer have
breakfast and lunch and what is ordered
 Finally antecedent states, which includes
the consumer mood or the amount of
cash in hand, can influence purchase
behavior and choice. 18
Multi Attribute Model

19
Types of Buying Decision/ Types of Buyer Behavior/
Decision Making by Consumer

cars, homes,
computers, Chips, soaps, ice-cream
education

Lighter or match box,

Furniture, curtain, carpets milk, bread
Types of Buying Decision/ Types of Buyer Behavior/
Decision Making by Consumer

Extensive/ Complex Decision Making

This buyer will pass through a learning process, first

developing beliefs about the product, then attitudes, and then
making a thoughtful purchase choice. Examples: include cars,
homes, computers, education, mobile etc.
Characteristics
 High involvement

 Unfamiliar, expensive and/ or infrequently bough products

 High degree of economic/ performance/ psychological risk.

Limited/ Dissonance Reducing Buying Behavior

 Consumer involvement is very high due to high price and

infrequent purchase with less significance differences among
brands
 In this case buyer purchases the product which is easily

available
 After the product purchase, consumer may face dissonance

post purchase behavior Example: Using comparison

websites
Characteristics - Highly involvement
22
Limited/ Dissonance Reducing Buying Behavior

 Consumer involvement is very high due to high price and

infrequent purchase with less significance differences among
brands
 In this case buyer purchases the product which is easily

available
 After the product purchase, consumer may face dissonance

post purchase behavior Example: Using comparison

websites
Characteristics - Highly involvement
23
Habitual Buying Behavior
In habitual buying behavior consumer involvement is low as well as
there is no significance among brands. There is no brand loyalty.
Consumer do not need information regarding brand purchase,
characteristics. Example Lighter or match box, milk, bread
Characteristics
Low involvement

Variety Seeking Buying Behavior

Consumer involvement is very low but there is significance
differences among brands. In this situation brand switching is
common.
Attract consumers by offering free samples, low prices and special
discounts
Brand switching occurs for the sake of variety rather than
dissatisfaction
Example Chips, soaps, ice-cream etc.
 Types of consumer involvement
and decision making

Routine Limited Extensive

Involvement Short Low to High

moderate
Time Low Short to Long
moderate
Cost Short Low to High
moderate
Information Internal only Mostly Internal &
Search internal external
Number of one few many
alternatives
Howard Seth
Model
Nature of Consumer Behaviour

 The various factors that influence the consumer

behaviour are as follows:
 a. Marketing factors such as product design, price, promotion,
packaging, positioning and dis­tribution.
 b. Personal factors such as age, gender, education and income
level.
 c. Psychological factors such as buying motives, perception of
the product and attitudes towards the product.
 d. Situational factors such as physical surroundings at the time of
purchase, social surroundings and time factor.
 e. Social factors such as social status, reference groups and
family.
 f. Cultural factors, such as religion, social class—caste and sub-
castes.
 2. Undergoes a constant change:
 3. Varies from consumer to consumer:
 4. Varies from region to region and country to
county:
 5. Information on consumer behaviour is
important to the marketers:
 The knowledge of consumer behaviour enables
them to take appropriate marketing decisions in
respect of the following factors:
 a. Product design/model
 b. Pricing of the product
 c. Promotion of the product
 d. Packaging
 e. Positioning
 f. Place of distribution
 6. Leads to purchase decision
 7. Varies from product to product:
 8. Improves standard of living:
 9. Reflects status:
Differences Between Customer and Consumer

 Key Differences Between Customer and Consumer

 The following are the major differences between

Customer and Consumer:

 The person who buys the goods or services from a seller

is known as the Customer. The person who uses the
goods or services is known as a Consumer.
 The customer is also known as buyer or client whereas
the Consumer is the ultimate user of the goods.
 The customer can be an individual or a business entity
while a Consumer can be an individual or a family or a
group of people.
 Customer pays the price of the product or
service however he may recover it from the
other party, in case if he had purchased it on
behalf of any person. Conversely, Consumer not
necessarily pays the price of the product, like in
case the goods are gifted or if they are
purchased by the parents of a child.
 The customer purchases the goods for the
purpose of resale or to add value or for his
personal use or on behalf of another person. In
contrast to Consumer, who purchases the goods
for the purpose of consumption only.
Customer Value

 The difference between all the benefits derived

from the total product and all the cost of acquiring
these benefits

41
Providing Customer Value
1. Customer value is defined as the ratio between the
customer’s perceived benefits (economic, functional, and
psychological) and the resources (monetary, time, effort,
psychological) used to obtain those benefits.
a) Perceived value is relative and subjective.
b) Developing a value proposition is the core of successful
positioning.
c) Looking for the impact of emerging “megatrends” is a
factor in attaining successful positioning of a brand.

42
Determinants of customer perceived
value
Total customer Total customer
benefit cost

Product benefit Monetary cost

Services benefit MINUS Time cost

Personal benefit Energy cost

Image benefit Psychological cost

43
 Steps in customer value
analysis
1. Identify major attributes and benefits that
customers value
2. Assess the quantitative importance of
different attributes and benefits
3. Assess the company’s and competitor’s
performances on the different customer
values against rated importance
4. Examine ratings of specific segments
5. Monitor customer values over time
44
Customer perceived value (CPV),
Satisfaction & Delight
 Customer perceived value
 The customer’s evaluation of the

difference between all the benefits and

all the costs of a marketing offer relative
to those of competing offers
 Customer satisfaction
 The extent to which a product’s

perceived performance matches a

buyer’s expectations
45
Securing Customer
Retention
1. The overall objective of providing value to customers
continuously and more effectively than the competition is to
have and to retain highly satisfied customers.
2. Studies have shown that small reductions in customer
defections produce significant increases in profits because:
a. Loyal customers buy more products.
b. Loyal customers are less price sensitive and pay less
attention to competitors’ advertising.
c. Servicing existing customers, who are familiar with the
firm’s offerings and processes, is cheaper.
d. Loyal customers spread positive word-of-mouth and refer
other customers.
46
Consumer behaviour and marketing
strategy

 Market segmentation
 Positioning strategy
 New products
 New market applications
 Marketing mix
 Consumerism

47
SEGMENTING CONSUMERS

 The process of market segmentation identifies groups

of consumers who are similar to one another in one
or more ways, and then devise marketing strategies
that appeal to one or more groups – even at the
expense of excluding other segments from the firm’s
target market.

48
Market segmentation

 In concept, marketing boils down to two questions:

Which customers will we serve? and
How will we serve them?
 The STDP/STP approach tries to answer these difficult questions

49
 Types of Buying
Decision Behavior
 Buyer Decision Making
Process

Occur when -Personal How the Buy the most

the buyer resources- Family consumer preferred
recognizes a and Friends process brand, can
problem or -Commercial information be affected
need Sources- to arrive at by
triggered by : Advertising, brand -Attitudes of
Internal Internet choices others
Stimuli -Public resources- -Unexpected
External mass media, Situational
Stimuli consumer factors
organization
-Experiential
E.g. Singapore Airlines
 Singapore Airlines, practices segmentation to meet
the needs of different segments through four distinct
subsidiaries:
 Singapore Airlines => for long-haul premium service;
 Silk Air => for medium-haul premium service;
 Scoot => for long-haul budget service; and
 Tiger (part owned) => for budget service in medium-haul
markets.

52
Market segmentation bases
Consumer markets

B2B markets

53
B2B Markets and Buyer
Behaviour
 Business Buyer behavior refers to the buying behavior of the
organization that buys good and services for use in the
production of other products and services that are sold,
rented, or supplied to others.
 The Business buying process is the process where the buyer
determines which products and services are needed to
purchase, and then find, evaluate, and choose among
alternative brands.
 LinkedIn: the place for B to B

54
B2B Markets: Market
structure and Demand

Few but large buyers

Derived demand

Inelastic demands

Fluctuating demands

55
B2B Markets: Nature of the
Buying Units
 Business buyers usually face more complex buying decisions
than do consumer behavior. Compared with consumer
purchase, a business purchase usually involves
 Major decision participants
 More professional purchasing efforts
 More buyer and seller interaction

56
B2B Markets: Major type of
buying situations
 Straight rebuy: is a buying situation in which the buyer
routinely reorders something without any modifications.
 Modified rebuy: is a buying situation in which the buyer
wants to modify product specification, prices, terms or
suppliers.
 New task is the situation in which the buyer purchases a
product or service for the first time.

/MM-CRM/GLIM-PGPBA/2016 57
B2B Markets: Participant in
the business buying process
 Buyers center consists of all individual and units
that play a role in the business purchase decision-
making process.
 Users
 Influencers
 Deciders
 Purchasers
 Gatekeepers

58
Criteria Needed for Segmentation

 Segments must have enough profit potential to justify

developing and maintaining a MARKETING MIX
 Consumer must have heterogeneous (different) needs for the

product.
 Segmented consumer needs must be homogeneous (similar)

 Company must be able to reach a segment with a

MARKETING MIX,
 For example, how do marketers reach children?

• Cartoons • Cereal boxes • Sports

Must be able to measure characteristics & needs of consumers to
establish groups.
59
Geographic segmentation
 Geographic segmentation tries to divide markets into different
geographical units: these units include: • Regions: e.g. in India
these might be North, South East, Northeast and West.
 Countries: perhaps categorised by size, development or
membership of geographic region
 City / Town size: e.g. population within ranges or above a
certain level
 Population density: e.g. urban, suburban, rural, and semirural
 Climate: e.g. Northern, Southern

60
Demographic
segmentation
. Demographic segmentation divides the
market into groups based on variables such
as age, gender, family size, family life cycle,
income, occupation, education, religion,
race, generation, and nationality

61
Demographic Segmentation
 Age Consumer needs and wants change with age although
they may still wish to consumer the same types of product. So
marketers design, package and promote products differently to
meet the wants of different age groups. Good examples
include the marketing of toothpaste (contrast the branding of
toothpaste for children and adults) and toys (with many age-
based segments).
 Life-cycle Stage A consumer stage in the life cycle is an
important variable - particularly in markets such as leisure and
tourism. For example,

62
 Gender Gender segmentation is widely used in consumer
marketing. The best examples include clothing, hairdressing,
magazines and toiletries and cosmetics.
 Income Many companies target affluent consumers with
luxury goods and convenience services. Good examples
include Louise Phillip shirts, Hush Puppies shoes, mango and
American Express. By contrast, many companies focus on
marketing products that appeal directly to consumers with
relatively low incomes. Examples include Nirma detergents,
Lifebuoy soap, and discount clothing retailers such as
Megamaart.

63
Income based
Segmentation
• Using data from Census 2011,
GIS data, satellite imagery &
techniques viz. small area
statistics & neural networks,
Indicus has deciphered affluence
measured at the level of PIN
codes.
• Affluence here is defined
households with incomes above
Rs 10 lakh, typically areas that
have high proportion of
households above such a
threshold also have very
high per capita incomes.

64
Psychographic
Segmentation
Psychographic segmentation divides buyers
into different groups based on social class,
lifestyle, or personality traits

65
Psychographic
Segmentation
 Lifestyles, also known as psychographics, consist of
activities, interests, and opinions (AIOS).
a. The interests and opinions portions are cognitive
constructs, which can be measured via surveys but are not
evidence-based.
b. A psychographic study includes a battery of statements
selected from a psychographic inventory and usually
accompanied by Likert scales on which respondents are
asked to indicate their level of agreement or disagreement
with each statement.

66
 VALS (an acronym for “values and lifestyles”) is the most
popular segmentation system combining lifestyles and values.
VALS focuses explicitly on explaining consumer purchasing
behavior.
 VALS includes three primary motivations: ideals motivated,
achievement motivated and self-expression motivated.
 Each of these three major self-motivations represents distinct
attitudes, lifestyles, and decision-making styles.

67
Behavioural segmentation
 Behavioural segmentation divides customers into groups
based on the way they respond to, use or know of a product.
Behavioural segments can group consumers in terms of:
 Occasions When a product is consumed or purchased. For
example, cereals have traditionally been marketed as a
breakfast-related product. Kellogg’s have always encouraged
consumers to eat breakfast cereals on the “occasion” of
getting up. More recently, they have tried to extend the
consumption of cereals by promoting the product as an ideal,
anytime snack food.
 Usage Some markets can be segmented into light, medium
and heavy user groups
68
 Loyalty Loyal consumers - those who buy one brand all or
most of the time - are valuable customers. Many companies
try to segment their markets into those where loyal customers
can be found and retained compared with segments where
customers rarely display any product loyalty. The airlines
market is a very good example in this case. Most of these
airlines run very good frequent fliers programme to retail
customer loyalty.

69
 Benefits Sought This is an important form of behavioural
segmentation. Benefit segmentation requires marketers to
understand and find the main benefits customers look for in a
product. An excellent example is the toothpaste market where
research has found four main “benefit segments” - economic;
medicinal, cosmetic and taste.

70
71
Business Problem
 The management team of a large shopping mall would
like to understand the types of people who are, or could
be, visiting their mall.

 They have good reasons to believe that there are a few

different market segments, and they are considering
designing and positioning the shopping mall services
better in order to attract mainly a few profitable market
segments, or to differentiate their services
(e.g. invitations to events, discounts, etc) across market
segments.
72
Target Marketing
Selecting Target Market Segments

 Target market consists of a set of buyers who

share common needs or characteristics that
the company decides to serve
 (Which it feels is the most opportune and
appropriate for them and where they have distinct
competitive advantage; or they feel that it is the
best defense strategy against competitors)

73
Selecting Target Markets

74
Criteria for Effective Targeting of
Marketing Segments

 To be an effective target, a market segment should be:

identifiable, sizeable, stable or growing, accessible, and
congruent with the marketer’s objectives and resources.
 Identifiable
1. To divide the market into separate segments on the basis of
common or shared needs or characteristics that are relevant to
the product or service, a marketer must be able to identify
these characteristics.
2. Some segmentation variables such as demographics are easy
to identify, while others such as benefits sought, more
difficult.

75
 Sizeable: In order to be a viable market, a segment must consist of
enough consumers to make targeting it profitable.

 Stable: Most marketers prefer to target consumer segments that are

relatively stable in terms of lifestyles and consumption patters and
avoid “fickle” segments that are unpredictable.

 Accessible: To be targeted, a segment must be accessible, which

means that marketers must be able to reach that market segment in an
economical way.

 Congruent with the Company’s Objectives and Resources: Not

every company is interested or has the means to reach every market
segment, even if that segment meets the four preceding criteria.
76
Developing a Target Market Strategy

 Developing a target market strategy has

three phases:
1. Analysing consumer demand
2. Targeting the market(s)
• Undifferentiated
• Concentrated
• Multisegmented
3. Developing the marketing strategy

77
Target marketing strategies

 Undifferentiated mktg. tgts the whole mkt with one offer

 Mass marketing
 Focuses on common needs rather than what’s different (Ford
Motor Model T)
 Differentiated mktg. tgts several different mkt segments and
designs separate offers for each
 Goal is to achieve higher sales and stronger position
 More expensive than undifferentiated marketing (Almost all
companies)
 Concentrated mktg. tgts a small share of a large mkt
 Possibly limited company resources (startups)
 Deeper knowledge of the target segment (Galloway golf)
 More effective and efficient (LVMH, Hermes, BCG
Consulting) 78
 Target marketing strategies
 Micromarketing/Individual Marketing is
the practice of tailoring products and
marketing programs to suit the tastes of
specific individuals and locations
 Local marketing (Big Bazar in Mumbai vs
New Delhi)
 Individual marketing (Brands that customize
-Mercedes Benz, Nike, Amazon, Vodafone or
B2B selling
 e.g. in online marketing, algorithms are used to
customize search results matching the customers
tastes and preferences
 Mass customization (Airtel My Plan)

79
 Final recap
 For the concept of segmentation to work, Yankelovich &
Meer (2006) propose a check list –
 What do we want segmentation to achieve or solve?
 Which customers drive profits? Segmentation must identify
groups that matter to a co.’s financial performance
 Which attitudes matter to the buying decision?
 What are my customers actually doing? e.g. usage rate;
switching behavior etc.
 Will this segmentation make sense to senior mgmt.?
 Can our segmentation register change?

80
Segment
Marketing
• Market segment consists of a group of
customers who share a similar set of needs
and wants.
– Eg: Railways, Automobile companies, Airlines.
Niche
Marketing
• More narrowly defined customer group
seeking a distinctive mix of benefits.
• Marketers usually identify niches by dividing a
segment into subsegments.
Eg: Tata Nano, Crack cream, Emami Fair and
Handsome cream, Toothpaste with Lemon and
salt, Sports channels, News channels.
Local
Marketing
• Marketing program tailored to the needs and
wants of local customer groups.
Eg: Movie in different languages, Matrimony sites.
• Grassroots marketing – Marketing activities
concentrate on getting as close and
personally relevant to individual customers as
possible.
Individual
Marketing
• “Segments of one,” “customized marketing,” or
“one-to-one marketing.”
• Customerization combines operationally driven
mass customization with customized marketing.
• A company is customerized when it is able to
respond to individual customers by customizing
its products, services and messages on a one-to-
one basis.
Eg: Automobiles, Paint companies.
Bases for
Segmenting
Consumer
Markets
• Descriptive characteristics
 Geographic.
 Demographic.
 Psychographic.
• Behavioural considerations
Geographic
Segmentation
• Division of the market into
different geographical units.
• Logistics also need to be strong to serve
the diverse geographical market segments.
Demographic
Segmentation
• Market is divided into groups on the basis of
variables.
Age and Life-cycle Stage
Gender
Income
Occupation
Psychographic
Segmentation
(Lifestyle)
• Psychographics is the of
using
sciencepsychology and demographics
to betterconsumers.
understand
• Buyers are divided into different groups on
the basis of psychological/personality traits,
lifestyle or values, food habits, Religion.
– Eg: McDonald’s, Titan watches, Maggi,
Aashirvaad.
Behavioural
Segmentation
• Buyers are divided into groups on the basis of
their knowledge of, attitude toward, use of, or
response to a product.
• Decision roles
 People play five roles in a buying decision:
o Initiator
o Influencer
o Decider
o Buyer
o User
• Behavioural variables
 Occasions – Archies, Hallmark, special festival gift packs,
Monaco toppings.
 Benefits – Toothpaste for gum problems,
soaps, shampoos.
 User status – Non-users, Ex-users, potential users, first-
time users and regular users.
 Usage rate – Light, medium and heavy product users.
 Buyer-readiness stage – Unaware, aware,
informed, interested, desire, intend to buy.
 Loyalty status
o Extremely loyals – Consumers who buy only one brand
all the time.
o Split loyals – Consumers who are loyal to two or three
brands.
o Shifting loyals – Consumers who shift loyalty from one
brand to another.
o Switchers – Consumers who show no loyalty to
any brand.
 Attitude – Enthusiastic, positive, negative,
and hostile.
 Behavioural
Segmentation
Breakdown
Target Market

Unaware Aware

Not Tried
tried

Negative Favourabl Not yet

Neutral Rejector Repeated
opinion e repeate
opinion d
Loyal to Loyal to
other Switcher
brand

brand Light Regular Heavy

user user
user
Target
Marketing
• The firm must decide how many and
which markets to target.
• Several variables are combined to
identify smaller, better-defined target groups.
Effective Targeting
(Segmentation)
criteria
• Measurable
 Size, purchasing power
• Substantial
 A segment be the largest possible
should
homogeneous group
• Accessible be effectively reached and
 The segments
can served
• Differentiable
• Actionable
 Effective programs can be formulated for attracting
and serving the segments.
Evaluating and
selecting the Market
Segments
• In evaluating, two factors must be considered:
 Segment’s overall attractiveness.
 Company’s objectives and resources.
• After evaluating different segments, the
company can consider five patterns of target
market selection.
Five patterns of
Target Market
Selection
• Single-segment concentration
M1 M2 M3
P1

P2

P3

•S
e
l
e
• Single-Segment Concentration
 Through concentrated marketing, the firm gains a
strong knowledge of the segment’s needs and
achieves a strong market presence.
 Risks are also associated.

• Selective Specialization
 There may be a little or no synergy among
the segments but each promises to gain profit.
 This multi segment strategy has the advantage of
diversifying the firm’s risk.
• Product specialization
M1 M2 M3
P1

P2

P3

•M
a
r
k
• Product Specialization
 A certain product is being sold to several
market segments.
 Eg: MS Office
• Market Specialization
 Serving many needs of a particular
customer group.

• Full Market Coverage

 To serve all customer groups with all the products
they might need.
• Full Market coverage
M1 M2 M3
P1

P2

P3
 P = Product M = Market
 Differentiation
Differentiation is the act of designing a
set of meaningful differences to
distinguish your
Company’s offering to that of the
The process of diving the market into various
competitors.
homogeneous groups, identifying the specific
requirements of the said homogeneous groups and
coming up with meaningful and distinct offering for each
off the target groups is called Differentiated marketing.
 Differentiation
Differentiation Parameters
 Product Differentiation
 Service Differentiation
 Personal Differentiation
 Channel Differentiation: Online Firms, Maruti
True Value
 Image based Differentiation: Apple, Bose
 POSSIBLE VALUE DIFFERENCES AND
COMPETITIVE ADVANTAGES
•Competitive Advantage
◦An advantage over competitors gained by offering greater customer
value either by having lower prices or providing more benefits that
justify higher prices.
•Points of differentiation (POD)
◦Product differentiation: E.g. performance, style or design
◦Services differentiation: E.g. speedy and convenient service
◦Channel differentiation: Channel's coverage, expertise, and
performance
◦People differentiation: Hiring and training better people than their
competitors do
◦Image differentiation: Image should convey a product's distinctive
benefits and positioning
• Different levels of Micromarketing
Segments
Niches
Local areas
Individuals
Differentiated
Marketing
• Mass Marketing
Seller engages in the mass production,
mass
distribution and mass promotion of
product
one for all buyers.
Eg: Beverages, Biscuits or Cookies, Mineral water
Differentiated Marketing

• A firm decides to target several market segments and

 designs separate offers for each.
• For example, P&G markets at least six different laundry
 detergent brands in the United States
◦ Tide, Gain, Cheer, Era, Dreft, and Bold - which
compete with each other on supermarket shelves.
◦ Then P&G further segments each detergent brand

to serve even narrower niches.

◦ One can buy any of dozens of versions of Tide-

from Tide Original, Tide Coldwater, or Tide Pods to

Tide Free & Gentle, Tide Vivid White + Bright, Tide
Colorguard, Tide plus Febreze, or Tide with a Touch
of Downy.
CONCENTRATED (NICHE) MARKETING

•Market-coverage strategy - a firm goes after a large share of

one or a few segments or niches.
• Firm can achieve a strong market position

• Greater knowledge of consumer needs in the niche it serves

• The special reputation it acquires

•Market more effectively and efficiently

◦ Fine-tune its products, prices, and programs to the needs
of carefully defined segments
◦ Targeting its products or services, channels, and

communications programs toward only consumers that

it can serve best and most profitably.
CONCENTRATED (NICHE) MARKETING

Smaller companies focus their limited resources on serving niches

•

that may be unimportant to or overlooked by larger competitors.

Many companies start as nichers to get a foothold against larger,
•

more resourceful competitors and then grow into broader

competitors.
Today, the low cost of setting up shop on the internet makes it even
•

more profitable to serve seemingly small niches.

 Micro Marketing

Tailoring products and marketing programs to

•

the needs and wants of specific individuals and

local customer segments. Includes:
◦ Localmarketing: Tailoring brands and
marketing to the needs and wants of local
customer segments-cities, neighbourhoods,
and even specific stores.
◦ Individual
marketing: Tailoring products and
marketing programs to the needs and
preferences of individual customers.
 Individual Marketing

Mass Customization: Process by which firms interact one to

one with masses of customers to design products, services, and
marketing programs tailor-made to individual needs.
 Hyper-customization of everything from food, artwork,
earphones, and sneakers to high-end luxury products.
◦ [Link]: Buy M&Ms with personalized messages or

images embossed on
 each

◦ Nike ID or Puma Factory: to design and order your very own

personalized sneakers
Local Marketing
 Brand
Positioning
• Positioning is the act of designing the
company’s offering and image to occupy a
distinctive place in the minds of the target
consumers/market.
• Goal – To locate the brand/product in the
minds of consumers to maximize the
potential benefit to the firm.
 Value
Proposition
Brand, Product Target Customers Benefits Value Proposition
and Company
XUV500, SUV, Lifestyle- Ruggedne A vehicle that provides
Mahindra oriented ss, Luxury the luxury and
& customers and comfort of a car and
Mahindra comfort the adventure and
thrill of an SUV

Tiago, Car, Small-car Spaciousness A spacious,

Tata Motors consumers who small car
want a more without extra
spacious vehicle costs
Domino’s , Pizza Convenience- Delivery, speed A good, hot pizza
minded Pizza and good delivered to your
lovers quality door within 30
minutes of ordering
• Positioning requires that similarities and
between products/brands
difference
defined and communicated. be
• sDeciding on a positioning
determining a requires
frame of reference
identifying by the
competition target market
and identifying the ideal and
thepoints-of-difference
points- of-parity and
Competitive Frame of References
• Competitive Frame of Reference
 Starting point is to determine category
membership – the products or sets of products
with which a brand/product competes and which
function as close substitutes.
Points-of-Difference and
Points-of- Parity
• Points-of-Difference
 Points-of-Difference (PODs) are
benefits attributes or strongly
consumers associate with
brand, positively evaluate a and believe they
could not find to the same extent with a
competitive brand/product.

Eg: Apple (design), Rolls Royce (quality)

• Points-of-Parity:
 Points-of-Parity (POPs) are associations that are
not necessarily unique to the brand/product but
may in fact be shared with other brands/products.
• Two basic forms:
 Category Points-of-Parity are associations
consumers view as essential to a certain product
or service category.
POINTS-OF-DIFFERENCE AND POINTS- OF-
PARITY

 Points-of-parity (POPs)
◦ Attribute/benefit associations that are not necessarily unique to the brand
but may in fact be shared with other brands
 Competitive points-of-parity associations
designed are negate points-
to competitors’ of-
difference.
Eg: Dettol and Savlon (“no-sting” property).
POINTS-OF-DIFFERENCE AND POINTS-OF- PARITY
Importance/Usefulness
of Positioning
• Positioning connects Product Offering with
Target Market
 Target market selection clarifies for whom the
product is intended and marketing mix shows the
way in which the 7Ps are to be aligned in the offer
to the target market, positioning acts as the bridge
linking the product offer with the target market.
Eg: Maggi (Good to eat, fast to cook, anytime snack),
Kellogg’s (Breakfast food), Sprite (Sprite bujhaye only
pyaas, baki all bakwaas).
• Through Positioning, the brand/product seeks
a Locus in the consumer’s mind
 In positioning, the consumer’s mind is viewed as a
geometric perceptual space, with different product
categories and brands occupying certain positions.
 These positions can be changed as the available
space can be taken by new brands/products with
the help of positioning.
 Brand Mantra
 Communicate- What is Unique

 Simplify- Short, Crisp and Memorable

 Inspire- Meaningful and relevant to customer

And employee
Real Beauty for Real People
 Brand Mantra

Food, Fun and Folks Fun Family Entertainment

 Assignmen
A company plans to launch new brand of summer cool deodorant? How will
t the
you segment 1 market?
• Based on the product type : Based on the product type Deodorant and
perfume.
 Market size of perfume is significant: Associated with luxury and premium
personal grooming
 A symbol of sophistication and use them for special occasion.
• By Packaging Material Analysis: Metal, Plastic and others.
 Plastic containers are considered to be durable, lower cost compared to
other materials.
 Metals are gaining ground due to the durability and easier recycling
process
• By end user analysis
 Men segment to hold dominant market share driven by greater
participation in Sport activities.
• Based on region: North, South, West and East India.
• North region is home to major metropolitan cities like Delhi, Chandigarh
and Jaipur.
• Rapid urbanization and higher disposable income.
By Age

Age group Segment Trends Brands Targeting

the group

14-17 years Influenced by parents, Axe, Set Wet,

curious and explorative, No Rexona, Fa and
loyalty Spinz..

18-22 years More of experimenting Axe, Set Wet, Nike,

group, seek attention and Adidas, Cinthol
want to be trendy

23-28 years Tend to become loyal Axe, Park Avenue,

towards a brand, try Nivea, Playboy
expensive variants, Status
seekers

28+ years High brand loyalty, health Old spice, Tommy,

conscious, High Dove, Park Avenue
expenditure
 Segmentation by Lifestyle

Lifestyle Segment Trends Brands targeting

the Market

Sporty and Anti-perspirant Nike, Adidas,

Outdoor High on hygiene and bacterial Reebok
properties

Sedentary Inclined towards negation of Axe, Cinthol, Rexona

body odor.

Heavy Anti perspirant Brut, Fogg, Cinthol

commuter Long lasting fragrance

Highly Social Image Building Old spice, Tommy,

Rich fragrance dove, park avenue,
Status reflection Playboy.
 Assignmen
t 2
A company plans to launch a new brand of 200cc of two-wheeler bikes.
How will you segment the market?
• According to Demographic factors
 Age
 Marital status
 Family Annual income
 Profession/ Occupation
 Psychographic: Style and Design
 Behavioral:
• Needs and Benefits
• Decision roles
• Use and User Status
 Assignment
3:
Q. What are the success factor behind “Sting-Energy Drink” in
India. Please discuss Energy drink Marketing strategy in India.
[Link] Porter’s Five Forces Model, discuss why the energy drink industry
has recently received a high level of attention in developing countries.
[Link] does a company gain competitive advantage in the energy drink
industry?
[Link] are the health challenges faced by an energy drink company in a
developing country?
[Link] does a company develop a marketing mix strategy to overcome
challenges associated with competition in terms of branding?
[Link] you were the Managing Director of Varun Beverage Ltd, how would you
expand the brand across borders to ensure successful market development?
For No Roads. For All Roads

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3
Positioning
 Positioning refers to how customers think about proposed and/
or present brands in a market.
 A marketing manager needs a realistic view of how customers
think about offerings in the market. Without that, it’s hard to
differentiate. At the same time, the manager should know how
he or she wants target customers to think about the firm’s
marketing mix. Positioning issues are especially important
when competitors in a market appear to be very similar. For
example, many people think that there isn’t much difference
between one brand of TV and another. But Sony wants TV
buyers to see its Trinitron brand screen as offering the very
best picture.
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 Positioning’s goal is to locate the brand
in the minds of consumers to maximize
the potential benefit to the firm.
 FedEx vs UPS
 Federal Express – “Relax, it's FedEx”; “The world
on time”; “When it absolutely, positively has to
get there overnight”; “We Understand”
 United Parcel Service - “What can brown do for
you?”; “We love logistics”; “United Problem
Solvers”.

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Repositioning
 Once you know what customers think, then you can decide
whether to leave the product (and marketing mix) alone or
reposition it. This may mean physical changes in the product
or simply image changes based on promotion.
 For example, most cola drinkers can’t pick out their favourite
brand in a blind test—so physical changes might not be
necessary (and might not even work) to reposition a cola. Yet,
ads that portray Pepsi drinkers in exciting situations help
position it as the “choice of a new generation.” Conversely, 7-
Up reminds us that it is the uncola with no caffeine, “never
had it and never will.”

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 A good brand positioning helps guide marketing
strategy by clarifying the brand’s essence,
identifying the goals it helps the consumer
achieve, and showing how it does so in a unique
way: e.g. – Moov.
 Moov, the pain relieving ointment from Paras

Pharma, succeeded in a mkt dominated by

established brands that promised relief from
head/body ache & sprains by positioning itself
as the backache specialist; Recently it has
moved its positioning to a Knee pain reliever.

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Consumer behavior in Digital Era

 To understand the meaning of digital

consumer.
 To know the difference between
traditional and digital marketing and
How Digital media shapes consumer
behavior?

13
8
Challenges
 India is a vast market and all mediums
are growing
 More complex, where the consumers are?
 Digital reach is still limited hinterland/rural
area of India.
 Tansihq ads were withdrawn- Checklist for
Marketers?

13
9
Meaning of Digital
consumer
 The consumers who are always connected
and that demonstrates deep engagement
with contents and brands online
 Characteristics of the Digital Consumer
 Researcher- information search and making
comparison thru google to make a better
decision
 Collaborator- crowd sourcing and designing
the product.
 Influencer- feedback in form of two way
communication
14
 Hyper connected- 24*7 online, content 0
Difference between Traditional and Digital
Marketing

 The fundamental change in the way we

live, work and play is characterized by
prevalence of digital media.
Digital Marketing Traditional
Marketing
Approach Any marketer tactics Any marketing
on earning people that pushes
interest instead of products and
buying it services on the
consumers
Communicati Two way and One way
on interactive
Customers Come to you Sought out

Entertainmen Seeks to Rarely seeks to

t entertain/educate entertain/educate 14
1
Emerging Trends
 Fundamental shift in how people communicate
day to day.
 Instant feedback can be given 24 hours a day, 7
days a week.
 Consumers are becoming content creators for
brand on digital media.
 UGC is used to create opportunities for
showcase brands and build customer
relationships.
 Greater ROI.
 Trustworthy Source of Information
14
2
Case Studies
 Maggi & Kellogg’s case study: Consumer
Behavior
 Titan Tansihq Jewelry: Segmentation &
Positioning
 Trend Z: Class Room Discussion on
Segmentation and Consumer Behavior
 Beyond Meat: Case Presentation on
Segmentation and Positioning:- 5 Marks
 2 Academic Assignment activities of 5 Marks
each
 1Quiz OR class participation : 5 Marks
14
3
How digital shapes consumer behavior

 Setting expectations
 Customer tolerance
 Customer dialogue
 Loyalty
 Multichannel communications and
promotions

14
4
 CONSUMER
BEHAVIOR
UNIT 2

Consumer Motivation, Perception &

Personality
Model of Consumer Behavior

Stimulus Response
Model
Factors Influencing Consumer Behavior
Cultural
Factors
• “The sum total of learned beliefs, values and customs
that serves to direct the consumer behavior of
members of a particular society”.

• “Culture is that complex whole that includes

knowledge, belief, art, moral, law, custom, and any
other capabilities and habits acquired by man as a
member of society”.

• “The distinctive way of life of a group of people, their

complete design for living.”
Element of Culture
 Language and Symbol
 Customs and Rituals
 Norms and sanction
 Values

14
9
The invisible hand of
Culture
 Everyday behavior is significantly
influenced by culture
 Because this is learnt over time, this
influence may not be obvious to people.
 People have a heightened awareness of
their own culture when they visit other
countries.

15
0
Three level of subcultures

Reflects the underlying dimension

Supernational of culture across broad regional
level areas ( across several “related”
countries

Reflect the culture of a particular

National Level country

Cultural divisions ( esp. subcultural

Group level differences) that contain group of
individuals

15
1
Culture satisfies needs
 Culture offers people order, direction and
guidance
 It provides standards and ‘rules’ about
daily life
 Culture beliefs, values and customs will be
followed as long as they yield satisfaction
but may be modified or replace over time.
 Therefore culture is constantly changing
 E.g. Shifting to more convivence foods & an
increased consciousness of health & fitness
15
2
Three level of subcultures

Explicitly passing information from

Formal parents & older siblings to young
Learning children

Learning from observations, or

Informal modelling the behavior of family,
learning friends & role models

Technical Teaching the child in a formal

learning school envirnoment

15
3
Enculturation and
acculturation
The learning of ones’ own culture
is known as Enculturation
The learning of a new or foreign
culture is known as Acculturation

Note: it is important for marketers

working for global firms to understand
the varying cultures of different markets
& countries

15
4
Culture is shared Various
• Primary institutions
agent for enculturation i.e. basic culture
beliefs, values & customs to society newest
transfer cultures members
Family • Teaching of consumer value & skills (e.g. meaning
of money, establishment of product tastes,
preferences & habits etc.

Educational • Imparting basic learning skills, history,

Institutions patriotism, citizenship & technical
training needed to prepare people

Religious • Moral leadership for society even in a

Institutions relatively secular society like India

• Imparting, reinforcing & occasionally

Mass Media changing a wide range of cultural
values
15
5
• Subcultures
 Include nationalities, religion, racial groups,
geographic regions.
• Social Stratification.
 Caste system
 Social classes(members of particular class
share similar values, interests and behaviour).

15
6
Social
Factors
• Reference groups
 All the groups that have a direct or indirect influence
on the person’s attitudes or behaviour
 Direct groups are called
groups
influencesuch as membership primary
neighbours). groups (family, friends,
 Secondary groups (Religious, professional).
 Aspirational groups are those a person hopes to join.
 Dissociative groups are those whose values
or behaviour an individual rejects.
• Opinion Leaders
• Family
 Family of orientation – Parents and Siblings.
 Family of procreation – Spouse and children.
• Roles and Status
 A role consists of the activities a person is expected to
perform.
 Each role carries a status.

 HBR Case: Kobe Influencer Marketing - Building Brand

Awareness via Social Media
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8
Personal
Factors
• Age and stage in the life cycle
 Consumption is shaped by the family life cycle and
resulted in different opportunities for marketers.
 Marketers should also consider critical life events or
transitions.
• Occupation and Economic circumstances
 Blue-Collar worker, White-Collar executive, Company
president.
 Income, Savings and assets, attitudes
toward spending and saving.
 Personality
 Personality means a set of distinguishing
human psychological traits.
 Lead to relatively consistent & enduring response.
 Self-confidence, dominance, autonomy, deference,
sociability, defensiveness, and adaptability.
 Brand personality refers to the specific human traits
that we can attribute to a particular brand.
 Sincerity, Excitement, Competence, Sophistication,
Ruggedness.
FREUD
•ID : Immediate Gratification based on Pleasure principle
•Ego : Mediate between the ID and super ego.
•Super ego: Counterweight to the ID. Morally Right
•Reality Principle: the ego finds a way to gratify the id and
the outside world will find acceptable.
 Personality Traits: identifiable characters that

define a person.
 Traits relevant to consumer behavior:

 Innovativeness

 Materialism

 Self consciousness

 Need for cognition

 Self Concept
 An individual’s self image that is composed of mixtures
of beliefs, observations, and feelings about personal
attributes.
 Self concept can be both positive or negative, and
consumers will purchase products in either case to
feed and/or express their perception of who they
are?
 Gym membership ? Weight control or plastic
surgery?
• Lifestyle and Values
 A lifestyle is a person’s pattern of living in the world
as expressed in activities, interests and opinions.
 Lifestyles are shaped partly by whether
consumers are money constrained or time
constrained.
 Consumer decisions are also influenced by
core values.
Psychological
Factors
 Motivation:
 Motivation is the driving force with in the individual
that impels them to action=“Reason for any action
taken by an individual”
 A need becomes a motive when it is aroused to
sufficient level of intensity to drive us to act.
 Motivation has two properties
 Direction- we select one goal over another
 Intensity- we pursue the goal with more or less vigor
 Model of Motivation Process

Previous
Learning

Unfulfilled Goal or Need

Needs, wants, Tension Drive Behavior Fulfillment
And desires

Cognitive
Processes

Tension
Reduction
Characteristics Affecting
Consumer Behavior
Motivational Research
 Qualitative research designed to probe the
consumer’s subconscious and discover deeply rooted
motives for purchasing a product.

 Motivation research Used to investigate the

psychological reasons why individuals buy specific
types of merchandise, or why they respond to
specific advertising appeals, to determine the base of
brand choices and product preferences.
Motivational Research Techniques
 Metaphor analysis
 Storytelling
 Word association & sentence completion
 Thematic appreciation test
 Psychological Factors
• Perception
 From the time there is any input to our sensory
organs to the time when we are able to interpret
the said input is called a perceptual process.
It Involves:
• Perceptual Selection: Choice of what is Internalized
• Perceptual Organization: The arrangement of new
input in the memory.
• Perceptual Interpretation: Giving meaning to the
input in the memory.
 Psychological Factors
• Perception is the process by which people select,
organize and interpret information to form a
meaningful picture of the world.
It Involves:
• Selective Attention: is the tendency to screen out most of the
information to which they are exposed.
• Selective Distortion: is the tendency for people to interpret
information in a way that will support what they already
believe.
• Selective retention: is the tendency to remember good points
made about a brand they favor and forget good points about
competing brands
 Psychological Factors
 Learning
 Learning highlights the impact of your past
experiences on your future decision making.
 Learning is produced thru the interplay of
 Drives- A strong internal stimulus impelling action
 Cues – are minor stimuli that determine when, where
and how a person responds
 Responses- Reaction to the stimulus & drive
 Reinforcement- Reward or punishment receive as a
result of your response
 Learning Theories
There are many theories about how people learn
They fall into two general categories
 Behavioral learning theories
 Classical Conditioning
 Instrumental/ operant conditioning
 Cognitive theories
 Psychological Factors
 Belief and attitudes
 Belief is a descriptive thought that a person has
towards some thing.
 Knowledge
 Opinion
 Faith

 Attitudes is the predisposition towards product and

service and it provides a clear indication regarding
the purchase intention.
 CONSUMER
BEHAVIOR
UNIT 3

Learning
Learning

 Consumer learning is a process that evolves from a

changes as consumer acquire knowledge from
experience, observations and interaction with
others.
“The process by which individual acquire purchase
and consumption knowledge and the experience they
apply to future related behavior.”
 [Link]
 Learning consist of 4 elements:
 Motives, cues, responses and reinforcement
Four elements of learning
 Motives: Uncovering motives is the primary
objectives of the marketers, who seek to teach
consumers how they can fulfill their needs by
buying certain products and brands. Unfilled
needs lead to motivation, which spurs learning.
 Cues are stimuli that direct motivated behavior.
The ad is a cue that satisfy the specific way to
satisfy a salient motive. E.g. Price, styling,
packaging, advertising and store displays are
cues designed to persuade consumers to fulfill
their needs by specifying buying specific
products
17
6
Four elements of learning
 Response: Response is an individual reaction to a drive
or a cue. Learning can occur even when response are
not overt. The automobile manufacturer that provides
a consistent cues to a consumer may not always
succeed in stimulating a purchase unless it forms a
favorable image of a particular automobile model in
the consumer’s mind.
 Reinforcement is the reward- the pleasure, enjoyments
and benefits- that consumer receives after buying and
using a product or service. For the marketer, the
challenge is to continue to provide consumers with an
ongoing positive product or service, thus reinforcing
future purchases.
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7
Learning
Theories
 Behavioral Theory of learning:
 Theories based on the premise that learning takes
place as a result of observable response to external
stimuli. Also known as stimulus response theory.
 Cognitive Theories
 A Theory of learning based on mental information
processing, often in response to problem solving.
Learning theories

 Behavioral  Cognitive
theories theories
 Classical  Informational
conditioning theory
 Instrumental  Involvement
conditioning theory
 Observational
(vicarious)
learning
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9
Behavioral Learning
 Measures only observable behaviors as
opposed to internal events like thinking
and emotion.
 Examines only outward behavior when
trying to understand if learning occurred.
 Classical Conditioning: “Knee Jerk”
response that builds up thru repeated
exposure & reinforcement.

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Classical Conditioning
 A behavioral learning theory according
to which a stimulus is paired with
another stimulus elicits a known
response that serves the same response
when used alone.
 Pavolian Experiment: learning of
Associations that enables customers to
expect
and anticipate events.

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Instrumental conditioning
 B F Skinner: learning by rewards
 A behavioral learning theory based on
trial & error process with habit forced as
the result of positive experience
(reinforcement) resulting from certain
responses or behaviors. It is more helpful
in explaining complex, goal directed
activities.

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Observational learning
 A process by which individual observes
the behavior of others, and
consequences of such behavior. Also
known as modeling or vicarious learning.

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Cognitive learning theory
 Cognitive learning is the systematic
evaluation of information and alternatives
needed to solve a recognized but
unfulfilled need or unsolved problem
 Holds that kind of learning most
characteristics of human being is problem
solving, which enables individual gain
some control over their environment.
 Human being have control over their
environment.
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Cognitive learning theory
 Information processing theory: patterned after computer
information processing that focuses on how information is
stored in human memory and how it is retrieved.
 Extinction : Loss of information can happen from sensory store
to short term memory and short term to long term memory.
Loss of memory can happen at any point of time.
 Transfer of information can be done via Process of repetition
also known as encoding.
 Encoding process by which information can be transferred from
short term to long term memory.

 Involvement theory
 Extended problem solving: House, car
 Limited problem solving: Cosmetics and consumer durable

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Outcomes and Measures of consumer
learning
 Recognition and recall tests
 In recognition tests, the consumer is shown an ad
and asked whether he or she remembers seeing it
and can remember any of the salient point.
 In recall tests, the consumer is asked whether he or
she has read as specific magazine or watched a
specific tv show, and if so, whether he or she can
recall any ads or commercial seen, the product and
the brand advertised, and any notable points about
the offerings promoted,
 Cognitive responses to advertising,
 Brand loyalty, and Brand equity.
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 CONSUMER
BEHAVIOR
UNIT 5

Attitude formation and Culture

Attitude formation & Attitude change

 What are Attitudes?

 A learned predisposition to behave in a
consistently favorable or unfavorable
w.r.t a given object.
 They are formed as a result of direct
experience with the product, information
acquired from others, and exposure to
mass media.
 Attitudes have consistency- do not
change easily.
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 Attitudes occur with in a situation 3
Structural Models of
Attitudes
 Tricomponent Model
 Multi-attribute Model
 The Trying to consume model
 Attitude towards the Ad model

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Tricomponent Model
 Attitudes comprise three components
 Cognitive: The knowledge and
perception of the features of an attitude
object- based on rational process – direct
interaction with the brands
 Affective: pertaining to emotional and
sentiment factors ( e.g. happiness,
sadness, shame, disgust, anger, distress,
guilt or surprise etc.)
 Conative: pertains to purchase intention
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21
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Mutli-Attribute Models
 Attitude models that examine the
composition of consumer attitudes in
terms of selected product attributes or
beliefs.
 Attitude towards the object model: is
function of evaluation of a product specific
beliefs and evaluation.
 The attitude towards behavior model: is the

attitude towards behaving or acting w.r.t an

object, rather than the object itself.
 Theory of reasoned action
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Strategies of Attitude
change
 The Theory of planned behavior can be used
to try and change the attitudes
 Changing the basic motivational function
 Associating the product with and admired

group or event e.g.

[Link]
 Resolving two conflicting attitudes e.g.

[Link]
 Altering components of multi attribute model

 Changing beliefs about competitors brands.

• Pepsi vs coke 1983, Apple Mac vs PC

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Types of Attitudes
 ABC Model of Attitudes
 Affect
 Behavior

 Cognition

 Functionalist theory
 Utilitarian
 Value expressive

 Ego defensive

 Knowledge

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All shown in this
advertisement
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]

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Social & Cultural
Envirnoment-8
 Cross-culture- Localization Vs
Standardization.
 Influence of culture, Learning Cultural
Values, Indian Core Values.
 Influence of family, social class and
family lifecycle,
 Multi- attribute Models. Changing the
motivational functions of attitude

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CONSUMER
BEHAVIOR
UNIT 5
• Think of a recent important purchase– briefly draw a flowchart of the steps you
recall moving through from the awareness of need to post purchase

• What influenced you at each step?

 Consumer Decision-Making
Process
Need
Need Recognition
Recognition

Information
Information Search
Search
Cultural,
Cultural, Social,
Social,
Individual
Individual and
and
Psychological Evaluation
Evaluation
Psychological of
Factors
Factors of Alternatives
Alternatives
affect
affect
all
all steps
steps Purchase
Purchase

Postpurchase
Postpurchase
Behavior
Behavior
 Complete model of consumer behavior

Start
Need
recognition
Internal
search Influences
Search
• culture
Exposure
• social class
• family
Stimuli Attention • situation
Alternative
(marketer evaluation
dominated, Memory
Comprehension
other) Individual
differences
Acceptance Purchase
• resources
• motivation &
Retention involvement
Outcomes • knowledge
• attitudes
• personality,
values, lifestyle
External
search
Dissatisfaction Satisfaction
• How do you know when to shop? What are the triggers that initiate an
awareness & search?

• What are the internal & external sources of these triggers?

 Need Recognition
• When a current product isn’t
Marketing helps
consumers recognize (or performing properly
create) an imbalance
between present status • When the consumer is running
and preferred state out of an product

• When another product seemsPreferred State

superior to the one currently used
 The information search stage

An internal search involves the scanning of

one's memory to recall previous experiences or Personal sources
knowledge concerning solutions to the problem-- (friends and family)
often sufficient for frequently purchased
products.
Public sources (rating
An external search may be necessary when services like Consumer
Reports)
past experience or knowledge is insufficient, the
risk of making a wrong purchase decision is
high, and/or the cost of gathering information is Marketer-dominated
low. sources (advertising or
sales people)

The evoked set: a group of

brands from which the buyer can
choose
• go back to your past purchase– what were the specific internal and
external sources of information that influenced your decision?

• how do you determine (and rate) the credibility of these sources?

• what specific information influenced you?

Determinants of External Search
 Buyer Behavior
Other people often influence a consumers purchase decision. The
marketer needs to know which people are involved in the buying
decision and what role each person plays, so that marketing
strategies can also be aimed at these people. (Kotler et al, 1994).

• Initiator: the person who first suggests or thinks of the idea of buying a
particular product or service.
• Influencer: a person whose views or advice carry weight in making the final
buying decision
• Decider: the person who ultimately makes the final buying decision or any part
of it
• Buyer: the person who makes the actual purchase
• User: the person who consumes the product or service
Note: teens are increasingly assuming more of these roles

Think about your past purchase– who was in which role?

 Wife
Relative influence of husbands & wives
Dominant
Child clothing Women’s
clothing
Final Information groceries
Pots & pans
decision search
NonRx
lamps
Toys/games
furniture
luggage
carpet
Paint wallpaper
refrigerator
vacations
Men’s leisure clothing
Joint Men’s business clothing
stereo
TV sets
camera
Financial planning

Family car Sport equipment

hardware

Lawn mower

Husband
Extent of role specialization Dominant

100 75 50 25 0
 Consumer decision making varies with
the level of involvement in the purchasing
decision

• Extensive: problem solving occurs when

buyers purchase more expensive, less
frequently purchased products in an
unfamiliar product category requiring
information search & evaluation; may
experience cognitive dissonance.

• Limited: problem solving occurs when buyers are confronted

with an unfamiliar brand in a familiar product category Increase in
Consumer
• Routine: response behavior occurs evaluation
processes
when buyers purchase low cost, low risk, brand loyal, frequently
purchased, low personal identification or relevance, items with
which they are familiar.
• quickly list 10 items you have purchased in the past month

• reexamine how long it took you to make a decision on each

• why did such a difference in decision occur?

 Factors affecting
Consumer involvement

• Previous experience: low level involvement

• Interest: high involvement
• Perceived risk of negative consequences: high involvement
• Situation: low to high due to risk
• Social visibility: involvement increases with product visibility

So…
• Offer extensive information on high involvement products
• In-store promotion & placement is important for low involvement products
• Linking low-involvement product to high-involvement issue can increase sales
 Types of consumer involvement
and decision making

Routine Limited Extensive

Involvement Short Low to High

moderate
Time Low Short to Long
moderate
Cost Short Low to High
moderate
Information Internal only Mostly Internal &
Search internal external
Number of one few many
alternatives
 Compensatory Decision: Using product characteristics to guide decision
• Select the best overall brand-- evaluates brand options in terms of each relevant
attribute and computes a weighted or summated score for each brand. The consumer
chooses the brand with the highest score.
• Compensatory model because a positive score on one attribute can outweigh a
negative score on another attribute.

• Conjunctive Decision Rule (cutoff criteria)-- Consumer sets a minimum standard for
each attribute and if a brand fails to pass any standard, it is dropped from consideration .
• Reduces a large consideration set to a manageable size.
• Often used in conjunction with another decision rule.

• Disjunctive Decision Rule (rank by importance)-- sets a minimum acceptable

standard as the cutoff point for each attribute--any brand that exceeds the cutoff point is
accepted.
• Reduces large consideration set to a more manageable number of alternatives.
• Consumer may settle for the first satisfactory brand as final choice or may use
another decision rule.

• Synthesized decision rule-- Consumers maintain overall evaluations of brands in

their long term memories. Brands on not evaluated on individual attributes but on the
highest perceived overall rating.
• think of an important purchasing decision you have made

• what are some of the thoughts you have had following your purchase?
Any regrets?

• what has influenced those thoughts?

• how have you dealt with the discomfort?

• how has the company anticipated or dealt with your discomfort?

 Postpurchase Behavior

?
Cognitive Dissonance

Can minimize through:

Effective Communication
Did I make a good decision?
Follow-up
Guarantees
Did I buy the right product? Warranties
Underpromise & overdeliver
Did I get a good value?
Sour Grapes–
a story of
cognitive dissonance

…after being unable to reach the grapes the fox said, “these
grapes are probably sour, and if I had them I would not eat them.”
--Aesop
 Cognitive Dissonance

• psychological discomfort caused by inconsistencies

among a person’s beliefs, attitudes, and actions
• varies in intensity based on importance of issue and
degree of inconsistency
• induces a “drive state” to avoid or reduce dissonance by
changing beliefs, attitudes, or behaviors and thereby
restore consistency

Applications:

Tendency to avoid information can be countered by eliciting interest,

norm of fairness, or perceive usefulness of information

Post-decision “buyer’s remorse” may be increased by importance or difficulty or

irreversibility of decision

Counter-attitudinal action, freely chosen with little incentive or justification, leads

to attitude change (e.g., new product at special low price)
• think of an innovation in your field

• describe different groups of employees in your organization who would

respond early and favorably, as well as later and unfavorably

• what are the differences between these groups?

• how could you use this information to market the innovation to them more
effectively?
• Identify an innovation in your organization or an organization you are
familiar with
• Identify the subgroups who responded to the innovation using the
Rogers & Shoemaker stakeholder model
• What could have been done to facilitate acceptance by each of these
groups?
Decision Processing
 Elaboration Likelihood Method (ELM) of persuasion
Persuasive Communication
Attitude Shift:
• short-lived
Motivated to Process? • susceptible to influence
• personal relevance • dissonance arousal • unpredictable
• personal importance • need for cognition
• personal responsibility • repetition

Peripheral Cues Present?

Ability to Process? • reciprocity (obligated, did a favor)
• consistency (way it’s done, similar to before)
• cognitive complexity • appropriate schema • social proof (peer pressure, conformity)
• critical thinking • message pace • liking (attractiveness, friendliness)
• distraction free • repetition • celebrity (identification, prestige)
• low arousal • issue familiarity • authority (expertise, experience, credibility)
• rapid speech, forceful presentation, charismatic style
• scarcity (limited time offer)
Nature of Active Cognitive Processing: (initial • tangible rewards
attitude, argument quality, etc.) • appealing visuals & music (emotional arousal)
Favorable Unfavorable Neither or • fear appeal
Thoughts Thoughts Neutral • weak counter-arguments
Predominate Predominate Predominate

Retain or Regain
Cognitive Structure Change: Are new cognitions Initial Attitude
adopted and stored in memory? Are different • greater persistence
responses made salient than previously? • resistant to counterattacks & fading
• predictive of behavior
• > brand memory
Enduring positive Enduring negative • > elaboration
attitude change attitude change • >usage intention
(persuasion) (boomerang) • > attitude accessibility
• > attitude confidence
• > attitude-behavior consistency
 Items 3, 4, 5, 7, 8, 9, 12, 16, and 17 are reverse scored
Write in the number that best fits your view:
1 2 3 4
Need for Cognition
completely mostly mostly completely Scale
false false true true
_____1. I would prefer complex to simple problems.
_____2. I like to have the responsibility of handling a situation that requires a lot of thinking.
_____3. Thinking is not my idea of fun. *
_____4. I would rather do something that requires little thought than something that is sure to
challenge my thinking abilities. *
_____5. I try to anticipate and avoid situations where there is likely chance I will have to think
in depth about something. *
_____6. I find satisfaction in deliberating hard and for long hours.
_____7. I only think as hard as I have to. *
_____8. I prefer to think about small, daily projects to long-term ones. *
_____9. I like tasks that require little thought once I’ve learned them. *
_____10. The idea of relying on thought to make my way to the top appeals to me.
_____11. I really enjoy a task that involves coming up with new solutions to problems.
_____12. Learning new ways to think doesn’t excite me very much. *
_____13. I prefer my life to be filled with puzzles that I must solve.
_____14. The notion of thinking abstractly is appealing to me.
_____15. I would prefer a task that is intellectual, difficult, and important to one that is somewhat
important but does not require much thought.
_____16. I feel relief rather than satisfaction after completing a task that required a lot of mental
effort. *
_____17. It’s enough for me that something gets the job done; I don’t care how or why it works. *
_____18. I usually end up deliberating about issues even when they do not affect me personally.
Sleeper Effect:
• when secondary source becomes more credible than primary source over
time
• persuasion may increase over time with a weak source
• forget the source but remember the message
• not if source is learned prior to the message (will ignore or bias processing)

Example: Attack ads during political campaigns

 CONSUMER
BEHAVIOR
UNIT 5

Academic Activity
Howard Seth
Model
Academic Activity 1
a. For each of the product/service
given below, identify whether the
purchase decision involves a high or
low degree of involvement under
normal circumstances:
 i. Car tyre
 ii. A pair of sneakers
 iii. Restaurant
 iv. Toothpaste
 v. Motorcycle In respect of the above products,
 vi. Microwave record which differentiated
 vii. Sweater alternatives (brands) are available
in the
 viii. VCD Player
market?
 ix. A bottler of Pepsi
 x. Book Shelf
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Academic Activity 2
 Identify any organisation and find out whether it
is production dominated or technology
dominated. Which are the key departments or
personnel involved in making purchases directly
related to the production process?

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Class Exercise
 A company is planning to introduce a Business daily in the Indian
Market. As a marketing consultant to this company, what
motivational, perception and attitudinal characteristics will you
consider for devising the four ‘P’s for this product.
 Product
 Price
 Place
 Promotion
 Kindly repeat this activity for a service of your choice such as
banking product.

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Class Exercise: Decision making process

 Consider the case of a consumer durable that you may have

recently purchased. Try to recall the actual process you might
have undergone in buying that. Write down the specific activities
you undertook at each stage of the decision-making process.

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Class Exercise- Adoption
process
 With the advancement of digital technology, some companies
plan to introduce interactive TV systems that will allow viewers to
select films from “video libraries” and view them on demand.
Among people you know, identify two who are likely to be the
innovators for such a new service and construct consumer profiles
using the characteristics of consumer innovators discussed in the
class room.

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Class Exercise-Fret and Regret

 Case analysis: Describe Ian’s Dilemma in this

case
 To act or not……. That is the question?
 Consumer tends to regret their actions (error of commissions) more
than their inaction (error of omissions).
 Research on consumer regret has also shown that people tend to
regret their decisions in the short term and tend to regret their
inaction in the long term.
 Consequences of regrettable actions to be finite, but the consequence
of regrettable inactions tend to be psychologically infinite.
 Possible outcomes and consequences
Which decision will leave him with the least amount of regret.
Option 1: Keep the iPhone 4S
Option 2: Return the iPhone 4S and exchange it for Galaxy S2.
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